# Petition for Writ of Certiorari — Rogers v. Liquid Air Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1283%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1989 - **Citation:** 492 U.S. 917 ## Text 7 Dupreme Govt Ua 87-12 62 : FILED ! JAN 28 1988 IN THE ‘ er. IR. Supreme Court of the United cS OCTOBER TERM, 1987 JACK R. RoGERS, GEORGE MICHLIK and D & R WELDING SupPLY COMPANY, an Illinois Corporation, and RAYMOND E. BRIDGES and BRIDGES WELDING SUPPLY & THERAPY, INC., Petitioners, Vv. LIQUID AIR CORPORATION, Respondent. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT FRANK H. BYERS II* JOHN L. GREENLEAF, JR. BYERS, BYERS & GREENLEAF, LTD. SUITE 100, 333 E. PERSHING ROAD DECATUR, ILLINOIS 62526 TELEPHONE: (217) 877-5353 Attorneys for Petitioners, Jack R. Rogers, George Michlik and D & R Welding Supply Company WILLIAM A. McNuTT* LOWE, MOORE, SUSLER, MCNuTT & WRIGLEY 250 N. WATER ST., P. O. BOX 1527 DECATUR, ILLINOIS 62525 TELEPHONE: (217) 429-5323 Attorney for Petitioners, Raymond E. Bridges and Bridges Welding Supply & Therapy, Inc. “COUNSEL OF RECORD PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203 bo QUESTIONS PRESENTED Whether the “‘pattern of racketeering activity’’ re- quirement of the Racketeer Influenced and Corrupt Organization Act, 18 U.S.C. §§1961, et seq., (here- inafter called ‘‘RICO’’), is met where the alleged predicate acts consisted of 16 allegedly false ship- ping orders over a few months in a single-pur- posed, close-ended scheme to defraud one victim? . Whether defendants in a civil RICO action should be afforded rights of criminal defendants, including the criminal standard of proof for the alleged pred- icate acts? . Whether vicarious liability may be imposed under Civil RICO to a corporation who did not exist until after completion of all the allegedly false shipping orders, except the final one? Whether the verdict, as trebled, violates the Eighth Amendment to the Constitution of the United States of America? . Whether the trial court used the appropriate meas- ure of damages? PARTIES Jack R. Rogers, George Michlik and Raymond E. Bridges are individual citizens of the United States of America. D & R Welding Supply Company and Bridges Welding Supply & Therapy, Inc. are Illinois corporations, are not publicly owned, are not the sub- sidiary of any other corporation, partnership or en- terprise, and are not the parent corporations to any subsidiaries. Jack R. Rogers is hereinafter referred to as ‘Rogers’. George Michlik is hereinafter re- ferred to as ‘‘Michlik”. Raymond E. Bridges is here- inafter referred to as “Bridges”: D & R Welding Supply Company is hereinafter referred to as “D & R’’. Bridges Welding Supply & Therapy, Inc. is here- inafter referred to as ‘Bridges Welding”’. Liquid Air Corporation, is a Delaware corporation, of which a corporation named L’Aire Liquide owns 10% or more of its stock. Petitioners are uninformed of any other related interests of the respondent, if any, that may be required to be disclosed pursuant to Supreme Court Rule 28.1. Respondent is herein- after referred to as “Liquid Air’. TABLE OF CONTENTS QUESTIONS PRESENTE DP, rT Meee sebechacsadecscoctecse OPINIONS BELOW JURISDICTION vr Tr T Tarr > Ira Phe, } STATEMENT UNDER RULE 28.4(b) ........................... es cvavnanccusnccacceaneeccesseecec. REASONS FOR GRANTING THE PETITION ................. DI oi cioce ccs ssisescseusessascacaccsnaccoccesoceceeess. ccna cacccadeicaecesencereeeesesceccsc. eC) rrr an. sassacaveconsceserceseic.... aos. «cis casacaavcscceserseenecseeece..c... CONCLUSION APPENDIX Opinion of the United States Court of Appeals, dated November 18, 1987 ........ccccccceccccecssceceee. Judgment of the United States Court of Appeals, dated November 13, 1987 .o....c.cccccccccccecccceeeee. Order of the United States Court of Appeals, dated December 10, 1987 ............cccccccsccesccsesecscscseeee, Order of the United States Court of Appeals, dated December 10, 1987 ................cccccccccccccccscesceeees, Page A) 119 11-29 »») 24 ) o7 ks ai »”7 »Q ‘ « OQ 7 lia DA. 24a Second Amended Judgment of the United States District Court, dated November 17, 1986 ...... Second Amended Judgment Order of the United States District Court, dated November 14, PO cckicsnshoulsdnsin teiseinnniatocaonuaasendeniacereneenties Order of the United States District Court, dated Cratotnnie 1A TOD siccsniisscsintscdisertocnttinsanasivcincsesen Findings of Fact and Conclusions of Law of the United States District Court, contained in ex- cerpts from trial transcripts dated October 14, 1986, and November 14, 1986 ...........::cceseeeenes Judgment of United States District Court, dated December 16, 1GBG nnccceiesccscnreccsscssccosccsnasesceosess Order of United States District Court, dated De- mene 16, IGG cccccsccccccsessacsecconscnssasssccesconcssere Fifth Amendment to the Constitution of the United en os saemnndensinatennenin Sixth Amendment to the Constitution of the United ii OE no casesenadanmecnnnianns Eighth Amendment to the Constitution of the United States of America ....................ceseesesees Section 1 of RICO, 18 U.S.C. §1961 ............eeeeeee Section 2 of RICO, 18 U.S.C. $1962 ....022.200:001-..--. Section 8 of RICO, 1S U.S.C. GIDC neccccnncsnscsovicsss Gection 4 of RICO, 18 U.S.C. GISGE ..... Re ROR NT ot: 8,9,12,13,14,15,18,21,28 29 Smith v. Wade, 461 U.S. 30 (19838) ..............cce eee, 25 Stontosky v. Kramer, 455 U.S. 745 (1982) ............ 21 Superior Oil Company v. Fulmer, 785 F.2d 252 (8th Coat. DINED sscooncitess sdsnsataiccenpnaranaitauanebesGeciciaea 12,14 vi Table of Authorities Continued Page Tellis v. United States Fidelity & Guaranty Com- pany, 805 F.2d 741 (7th Cir. 1986) vacated, Gt Basa Gee CIOS) kcctotinanadaaen 20 B. STATUTES SD Cats WROD incteicideastdccntcbactadeieanalnnel 6,17 BD Cs. Ee civeendtcctbsccndnseencinaansnnadien 6,17 SD Ue: ROO cnewrtiniibieadinsbeaase 3,11,20 56 Cas. Ge cntssiccencicediueiens 3,6,8,23,24 BD Ci. Ue ctcunecctemaacsdivnceubindechaaainnee 3 5B E.Akan Gee cecueeminbedaatemaaitoes 3,27 Be De UD ccccccencinccalsscebcaesuninabanenbbies 2 BS CG. BS De sacccctnsicscncasdoslsacncsaxtonacine 3 C. UNITED STATES CONSTITUTION Uae” CR NES “© cercccecastcceschsanecienpinseciions 2,25 Us MRR CIE WU ccccsucecsacebuntstdicesntancade 3,25 ae: CORTE: ORIN” VEE - cascscentaatsvenconsinuhainanens 3,25 D. OTHER AUTHORITIES Insurance Litigation Reporter, October, 1985 > FRING, | TOE snccscecsmntiecisatigndaan 26 Towers, Burden of Proof in RICO Actions; Does Sedima Provide Guidance? The Nationa! Law Journal, December 2, 1985, at page 26 Supreme Court of the Gnited States ’ . . * sar , ae ( ) ; ; rep y i ‘2? STFS: ri . : = linois Corporation. and RAYMOND E i i L ravion, anda LA YMOND . BRIDGE aad BDarmrs WeELpING Supply & SRIDGES and BRIDGES ELDING SUPPLY & T Ty Tyr" Dp ‘ l \ LN ) . ~ Pet 4 OTLETS. A Th T \ Liq AIR CORPORA Pp ni SpoTndce? PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT The petitioners, Jack R. Rogers, George Michiik and D & R Welding Supply Company, Inc., an Illinois Corporation, and Raymond E. Bridges and Bridges Welding Supply & Therapy, Inc., respectfully pray that a Writ of Certiorari issue to review the judgment and opinion of the United States Court of Appeals for the Seventh Circuit entered in the above-captioned proceeding on November 13, 1987, as amended by — the Orders of December 10. 1987. bo OPINIONS BELOW The opinion of the United States Court of Appeals for the Seventh Circuit is reported at 834 F.2d 1297 (7th Cir. 1987) and is reprinted in the Appendix hereto commencing at page la. The Orders of the United States District Court for the Central District of Illinois, Peoria Division, are unreported. They are reprinted in the Appendix hereto commencing at page 30a. Reference to the Opinions and Orders below shall be to the appropriate page of the Appendix and des- ignated as “app. __’’. Reference to the record shall be to the appropriate page of the volumes identified in the chart in the Appendix hereto commencing at page 5la. JURISDICTION The Judgment of the United States Court of Appeals for the Seventh Circuit, which the petitioners request this Court to review, was entered on Novem- ber 13, 1987, and amended by Order dated December 10, 1987. A Petition for Rehearing with suggestion for rehearing en banc was denied on December 10, 1987. This Petition for Writ of Certiorari is filed within 90 days of the entry of that Order. The ju- risdiction of this Court is invoked pursuant to 28 U.S.C. §1254(1). CONSTITUTION The Fifth Amendment to the Constitution of the United States of America, U.S. Const., amend. V, is set forth in the Appendix hereto at page 43a. The Sixth Amendment to the Constitution of the United States of America, U.S. Const., amend. VI, is set forth in the Appendix hereto at page 43a. The Eighth Amendment to the Constitution of the United States of America, U.S. Const., amend. VIII, is set forth in the Appendix hereto at page 43a. STATUTES Section 1 of RICO, 18 U.S.C. §1961, is set forth in the Appendix hereto at page 44a. Section 2 of RICO, 18 U.S.C. §1962, is set forth in the Appendix hereto at page 46a. Section 3 of RICO, 18 U.S.C. §1963, is set forth in the Appendix hereto at page 48a. Section 4 of RICO, 18 U.S.C. §1964, is set forth in the Appendix hereto at page 49a. STATEMENT UNDER RULE 28.4(b) Since this proceeding draws into question the con- stitutionality of the treble damage provision of $1964(c) of the Racketeer Influenced and Corrupt Or- ganization Act, 18 U.S.C. §1964(c), an act of Congress affecting the public interest, and neither the United States nor any agency, officer or employee thereof is a party, it is noted that 28 U.S.C. §2403(a) may be applicable. The courts below have not certified to the Attorney General the fact that the constitutionality of such act of Congress was drawn into question. STATEMENT 1. At trial the following facts were introduced into evidence: D & R is an illinois corporation of which two of its shareholders are Jack R. Rogers and George Mich- lik. D & R distributes welding supplies and com- pressed gases in Central Illinois and is involved in interstate commerce. (app. 2a). Some compressed gases distributed by D & R are bottled in steel cyl- inders. D & R both purchased and leased these cy]l- inders. (app. 2a, Transcript V.5 pp.4, 5,18,14,19-29). Initially, D & R was a distributor for Liquid Air. As part of the distributor arrangement, D & R leased steel cylinders from Liquid Air. After notification of price increases. D & R terminated its distributorship with Liquid Air effective September, 1981. Under the cylinder lease agreement with Liquid Air, D & R was obligated to return leased gas cylinders to Liquid Air, pay rent on the outstanding cylinders, or pay the then current cost of replacement, allowing for ordinary wear and tear, for any cylinders not returned or ac- ounted for. (app. 2a, Plaintiff’s Exhibit No. 25-1). In March, 1982, Liquid Air requested D & R to start turning in its compressed gas cylinders. D & R had approximately 5,196 cylinders on lease from Liq- uid Air at that time. By November 1, 1982, D& R had returned 2,199 cylinders. From November 1, 1982, until May 25, 1983, 19 Liquid Air shipping or- ders were prepared which reflected all but 12 of the remaining cylinders being returned by D & R. Of the said 19 shipping orders, 15 were executed on behalf of D & R by Rogers, Michlik or Mr. Oliver Penny- packer. Additionally, one shipping order was not signed by a representative of D & R. Liquid Air al- leged that these 16 shipping orders which reflect a total return of 2,681 cylinders were false. Two of the three remaining shipping orders were executed for D & R by its regular drivers, Mr. Gene Wilder and Mr. Robert Bauer. Liquid Air did not contest the validity of those shipping orders. The final shipping order was a paper transfer on the records of Liquid Air of 40 cylinders from the account of D & R to the account of A.W. Moore Welding Supply Co., the validity of which was not contested. (Transcript V.5, p.83; V.14, p.116; Plaintiff’s Exhibit No. 1; V.19, p.8; V.18, p.40; V.14, pp. 128-129) Liquid Air claimed that Ray Bridges, an employee of Liquid Air responsible for handling all of the pa- perwork at Liquid Air’s Peoria distribution center, falsified the said 16 shipping orders so that it would appear that D & R had returned all outstanding cy]- inders when, in fact, the returns were not made. Each shipping order involved a transaction using the mails twice and one wire transfer. Liquid Air further claimed that in return for Bridges’ efforts, Rogers and Michlik arranged to set Bridges up in his own welding business in Peoria, Illinois. Liquid Air claimed that Rogers and Michlik supplied Bridges Welding with personnel, capital and welding products. (app. 2a, 3a). In August, 1983, a Liquid Air employee compared Liquid Air’s inventory of cylinders on paper to the physical inventory taken in Peoria for July, 1983. The comparison revealed a discrepancy of 3,307 cylinders between those that Liquid Air counted and those that its internal documents registered. (app. 3a). 2. Procedural History in the Trial Court. On April 4, 1984, Liquid Air filed a Complaint against Rogers, Michlik, D & R, Bridges and Bridges Welding. The ensuing jury trial lasted approximately two and one-half weeks on the nine-count Amended Complaint. The jury found against all defendants on the RICO counts, Counts I, II, III and IV (18 U.S.C. §1962(a),(b),(c) and (d) respectively), and assessed com- pensatory damages in the amount of $750,000.00. The predicate acts alleged in the RICO counts were mail fraud, 18 U.S.C. §1341, and wire fraud, 18 U.S.C. §1348. In Count V, a common law conversion count, the jury found against all defendants and assessed $350,000.00 in actual damages and punitive damages in the following amounts: $25,000.00 against D & R; $15,000.00 against Bridges Welding; $10,000.00 against Rogers; $10,000.00 against Michlik; and $5,000.00 against Bridges. On Count VI, a claim for breach of fiduciary duty by Bridges, the jury found against Bridges and assessed $4,000.00 in actual dam- ages and $1,000.00 punitive damages against him. In Count VII for inducement to breach a fiduciary re- lationship, the jury found against Rogers, Michlik and D & R, and assessed actual damages in the amount of $750,000.00 and punitive damages in the amount of $10,000.00 against D & R, Rogers and Michlik. The jury found in favor of Bridges on Counts VIII and IX. (app. 3a, 4a). Pursuant to the Order of the U.S. Magistrate, the defendants had held certain Liquid Air cylinders in its possession until after the trial at which time the defendants returned 530 cylinders to Liquid Air pur- suant to the order of district court. The district court ordered that the replacement value of the 530 cyl- inders be subtracted from the total trebled damage award. (Trial Court Docket No. 82; Transcript V.20, p.34; V.21, p.13). The Petitioners have timely raised the issues pre- sented to this Court and each of the courts below. 3. Proceedings in the Court of Appeals: The court of appeals affirmed the judgment focus- ing much of its opinion on the issues raised in this petition. First considered by the court was whether civil RICO proceedings are quasi-criminal in nature. The court of appeals determined that civil RICO proceed- ings are not quasi-criminal reasoning that a civil RICO defendant does not face imprisonment nor does the defendant face the collateral consequences associated with conviction of a criminal offense. (app. 7a). Al- though the court of appeals acknowledged that a civil RICO defendant does face the opprobrium of being labeled a racketeer, it determined that such a label was not sufficiently stigmatizing to warrant criminal protections. Therefore, the court rejected the criminal standard of proof and other rights asserted by the defendants. (app. 7a). Alternatively, proof by a preponderance of the evi- dence was considered by the court to be sufficient for a finding of liability under civil RICO. (app. 8a). In so holding, the court stated that this Court’s opin- ion in Herman and McClean v. Huddleston, 459 U.S. 375 (1983) foreclosed the use of the standard of proof of clear and convincing evidence. The court could dis- cern no reasonable basis for distinguishing a federal securities claim based on fraud from a civil RICO claim based on fraud. Therefore, the court did not apply the clear and convincing standard. (app. 7a, 8a). Next addressed by the court of appeals was the question of proof sufficient to satisfy the requirement of a pattern of racketeering activity. The court of appeals noted the conflict among the various circuits concerning whether the predicate acts must be a part of two separate schemes before a pattern could be shown or whether they can be part of a single scheme. (app. 10a). The court of appeals found that there was a single scheme which lasted seven months and de- frauded a single victim by the preparation of 19 ship- ping orders, each resulting in the use of the mails and the use of the wire service. The court held that a repeated infliction of economic injury upon a single victim in a single scheme is sufficient to establish a pattern of racketeering activity for the purposes of civil RICO. (app.10a, 11a). Furthermore, the court held that the jury instruc- tion concerning the phrase ‘‘pattern of racketeering activity” did not need to advise the jury of the con- tinuity prong of this Court’s test of “‘pattern of rack- eteering activity’ as announced in Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479 (1985). The jury in- struction that the court approved on “pattern of rack- eteering activity’”’ omits categorically any reference to continuous, continuing, or threat of continuing activity. The court of appeals determined that continuity refers solely to the duration of the predicate acts. (app. 19a). The application of the doctrine of respondeat su- perior was also considered by the court. Under §1962(a) and (b) of RICO, Bridges Welding was found liable applying what the court called “vicarious lia- bility’’. The court stated that the shipping orders were completed by Bridges, acting as president of Bridges Welding, despite the fact that the falsification of ship- ping orders allegedly done by Bridges were all ac- complished prior to Bridges Welding doing any business and, except for one shipping order, before Bridges Welding was ever incorporated. (app.14a, 16a). Finally, the court determined that under civil RICO the measure of damages is the harm occasioned as a result of the predicate acts and held that the contract between D & R and Liquid Air determined the dam- ages for all the defendants. (app.2la). The court re- jected the measure of damages as the fair-market- value of the cylinders not returned. (app. 22a). The court of appeals further rejected the challenge to the trebled damage provision of RICO as violative of the Eighth Amendment proscription against excessive fines. The court stated that although there is some sense in which RICO trebled damages are punitive, they are largely compensatory. (app. 23a). SUMMARY OF ARGUMENT This case brings to issue the conflict among the circuit courts of appeal concerning the requirement of a “pattern of racketeering activity’ following this Court’s decision in Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479 (1985). A single, close-ended scheme of short duration with a single purpose to defraud one victim is not a “‘pattern of racketeering activity’’ which should invoke the heavy civil penalties of RICO. Contrary to the Eighth Circuit, in the instant deci- sion, the Seventh Circuit has joined the Eleventh Cir- cult and abandoned the ‘“‘continuity’’ requirement necessary to establish a “‘pattern of racketeering ac- tivity’’ as articulated in Sedima, supra. The potential operation and effect of RICO upon defendants in a civil action to enforce RICO warrant the protections provided by federal criminal law. In- 10 deed, the financial loss to the defendants in civil RICO is greater than the financial punishment which could be inflicted upon conviction of the underlying predi- cate acts. This, together with the social stigma of being labeled a ‘“‘racketeer’’, and the penal nature of the civil RICO as envisioned by Congress, mandates the enhanced protections not usually accorded civil defendants. Bridges Welding, a corporation peripheral to the alleged scheme, should not be held vicariously liable for the actions of a minority shareholder and officer, which were committed prior to its incorporation. Moreover, under RICO, there could not be a “‘pattern of racketeering activity’ during the time period when the agency-principal relationship existed. Contrary to the holding of the Seventh Circuit, a corporation, to be found liable under the statute, must more than just ‘‘benefit’’ from the RICO violation. The verdict, as trebled, violates the prohibition against the imposition of excessive fines under the Eighth Amendment to the Constitution of the United States of America. Finally, the wrong measure of damages was used by the courts below. An error in the underlying judg- ment is magnified by the trebling of damages in RICO. It is not sufficient to look solely to the perceived loss to the plaintiff, but the court must also look at the nature of the defendants actions and the context in which the claimed losses have arisen. Here the gra- vamen of the action is the common law tort of con- version, and, thus, the appropriate measure of damages is the fair-market value of the property con- verted. : 1] REASONS FOR GRANTING THE PETITION This case raises several important issues with re- spect to the civil enforcement .of RICO, 18 U.S.C. §1961, et seq. Specifically, it concerns the rights a defendant should have under RICO, the required proofs the plaintiff must present, and the kind of damages recoverable. These issues effect plaintiffs and defendents in civil RICO actions throughout the coun- try and are arising with increasing frequency. In deal- ing with these issues the circuit courts of appeal have rendered several recent inconsistent decisions. None of the issues raised in this Petition have yet been decided by this Court. In this case, Liquid Air has been able to parlay a claimed conversion, by otherwise legitimate business- man, of property ‘with a fair-market value of $293,000 into a judgment in excess of $2.8 million. Under the provisions of RICO, the plaintiff transformed this case, which ordinarily would have been presented as a breach of contract or, at most, a common law fraud action under State law, into a federal court action with catastrophic results. Affirmance of the judgment in this case will rob the defendants of the labor of their lifetime and leave them virtually pennyless. Left unchecked, plaintiffs, who may have absolutely no in- terest in pursuing the organized criminals which RICO was designed to combat, are flocking to the federal courts for the windfall profits available under RICO for what would otherwise be ordinary contract dis- putes and common law fraud claims. 12 I. A CLOSE-ENDED SINGLE SCHEME TO DEFRAUD ONE VICTIM THROUGH 16 ALLEGEDLY FALSE INVOICES OVER THE COURSE OF A FEW MONTHS DOES NOT SATISFY RICO’S REQUIRE- MENT OF A “PATTERN OF RACKETEERING AC- TIVITY” Sharply, this case focuses the conflicting positions taken by different circuit courts of appeal as to the “pattern of racketeering activity’’ requirements of RICO. In Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479 (1985), this Court noted that a “pattern of racketeering activity’’ required more than just two acts committed within a ten year period. Those acts must have ‘“‘continuity plus relationship which com- bines to produce a pattern.” (Sedima at 473 U.S. page 496 N.14; app. 10a). Application of that definition, however, has produced different results. The Eighth Circuit Court of Appeals requires that the predicate acts compromise more than one scheme before a pattern of racketeering activity may be found. See Superior O1l Company v. Fulmer, 785 F.2d 252 (8th Cir. 1986). (app. 10a). On the other hand, the Eleventh Circuit Court of Appeals requires only two or more predicate acts to be committed in a single scheme in order to establish a pattern of rack- eteering activity. See Bank of America v. Touche Ross & Co., 782 F.2d 966 (11th Cir. 1986). (app. 10a). Different still was Morgan v. Bank of Waukegan, 804 F.2d 970 (7th Cir. 1986), where the Seventh Circuit opted for a middle course between what it termed as the two extremes. In order to be sufficiently contin- uous to constitute a pattern of racketeering activity, it said, ‘‘the predicate acts must be ongoing over an identified period of time so that they can be fairly 13 viewed as constituting separate transactions, Le., “transactions ‘somewhat separated in time and place.’’”’’’ (Morgan, 804 F.2d at page 975). Morgan identifies relevant factors, with no one factor nec- essarily determinative, to be considered in determin- ing whether a pattern exists. In this case, the Seventh Circuit has held that if the alleged fraud can be perceived as a repeated infl- iction of economic injury, even if done to just one victim and in the course of one scheme, that is suf- ficient to establish a ‘“‘pattern of racketeering activ- ity’ for civil RICO purposes. Under the Seventh Circuit’s analysis here, the finding of distinct injuries determines the pattern requirement. If there are dis- tinct injuries, this opinion mandates the finding of a pattern of racketeering activity. This opinion effec- tively forecloses inquiry into the other factors listed in the Seventh Circuit’s own decision in Morgan. In this case, the Seventh Circuit has now adopted the position of the Eleventh Circuit that a plaintiff needs only to show that two or more predicate acts are committed in the performance of a single scheme. This expansive view of RICO conflicts with this Court’s admonishment in Sedima that two of anything does not make a pattern. The abandonment of the rational of Morgan by the Seventh Circuit is underscored by their approval of the erroneous jury instruction used in this case to define ‘‘pattern of racketeering activity.’’ The Sev- enth Circuit approved a jury instruction on “pattern of racketeering activity’ that omits categorically any reference to continuous, continuing or threat of con- tinuing activity. In so doing, this Seventh Circuit’s opinion highlights the abandonment of the first part 14 of the two-part test established by this Court in Se- dimé. Emphasis by the Seventh Circuit is now on the relationship between the predicate acts and no longer is there a separate continuity requirement as estab- lished in Sedima. No more clearly could the issue of what constitutes a pattern of racketeering activity and the conflicting positions of the various circuit courts of appeal be presented to this Court than is presented in this case. Whether there is one injury or more than one injury in a single scheme to defraud a single victim is really a matter of perception. In this case the alleged scheme was to show, by false paperwork, all leased cylinders returned by D & R when, in fact, they had not been returned. By its terms, the scheme required several false papers to be prepared. At the same time, how- ever, it was a close-ended scheme. It had a single purpose, and it was necessarily terminated when all leased cylinders were shown to be returned. Thus, whether there was one injury or more than one injury depends upon one’s view of the transaction. Since D & R had all the cylinders at the beginning of the alleged scheme and then had al] the same cylinders at the end of the alleged scheme, one could just as certainly state that there was but one injury to Liquid Air by the failure to return the leased cylinders. On the other hand, one could break the scheme down into separate actions and declare each paper trans- action to be a separate and distinct injury. Such was done by the Seventh Circuit in its opinion. This dissection of a single close-ended scheme to defraud one victim in order to find a pattern of rack- eteering activity dramatically conflicts with the Eighth Circuit’s decision in Superior Oil Co. v. Fulmer, su- 15 pra, and even with the Seventh Circuit’s prior deci- sion in Morgan. The Seventh Circuit, like the Eleventh Circuit, is no longer concentrating civil RICO on the offenders who pose a threat of continuing activity or those who regularly commit such crimes as it once had. See, Lipin Enterprises, Inc. v. Lee, 803 F.2d 322 (7th Cir. 1986) at page 324 and Marks v. Pannell Kerr Forster, 811 F.2d 1108 (7th Cir. 1987) at page 1111. Earlier, the Seventh Circuit had established the def- inition of “‘continuity”’ in Morgan based upon Sedima. The Seventh Circuit stated that continuity ‘would embrace predicate acts occuring at different points in time or involving different victims’. Morgan, 804 F.2d at page 975. Now, the Seventh Circuit has abandoned that def- inition. The Seventh Circuit stated in the instant opin- ion that “continuity refers instead to the duration of the predicate acts.’’ (app.19a). Thus, continuity now refers to the period of time, or duration, over which the predicate acts occurred in the same scheme rather than to the existence of other schemes, other victims or predicate acts which occurred at different points in time. The search for continuity is now an internal quest rather than an external one. The Seventh Cir- cuit abandoned the ‘“‘continuity’’ requirement estab- lished by this Court in Sedima. Il. DEFENDANTS IN A CIVIL RICO ACTION SHOULD BE AFFORDED RIGHTS OF CRIMINAL DEFENDANTS INCLUDING THE CRIMINAL STANDARD OF PROOF FOR THE ALLEGED PREDICATE ACTS. This case uniquely raises the issue of whether, and to what extent, constitutional criminags#aw protections 16 should apply to the civil enforcement of RICO, wherein the gravamen of the Complaint alleges crim- inal conduct, provides for punishment damages and irreparably stigmatizes the defendants who are found liable. The rights afforded criminal defendants, i.e. for a twelve-member jury, the privilege against self- incrimination, the standard of proof for conviction of beyond a reasonable doubt, and the presumption of innocence all apply to the predicate acts alleged in this case when criminally prosecuted. They should also apply in the private enforcement of RICO.- Whether an action is quasi-criminal or civil must be decided by the court based upon the statute and its potential operation and effect upon the defendants charged under it. Boyd v. United States, 116 US. 616, 29 L.Ed. 746, 6 S.Ct. 524 (1885). This Court stated in Boyd, supra, at 29 L.Ed. page 752: As, therefore, suits for penalties and forfeitures. incurred by the commission of offenses against the law, are of this quasi criminal nature, we think that they are within the reason of criminal proceedings for all the purposes of the Fourth Amendment of the Constitution. ... To determine whether an action is quasi-criminal, this Court in One 1958 Plymouth Sedan v. Pennsyl- vania, 380 U.S. 693 (1965), compared the defendant’s potential punishment for a criminal conviction of the predicate act with the potential financial loss which the defendant could incur under a statute which based liability upon the predicate act. After noting that the civil punishment was potentially greater than the criminal punishment, this court in One 1958 Plymouth Sedan, supra, held that the ‘‘civil’’ action was quasi- criminal. In this case the plaintiff alleged that the defendants committed mail fraud (18 U.S.C. §1341) and wire fraud (18 U.S.C. §1343). Each individual defendant may be punished upon conviction of wire fraud or mail fraud to pay a fine of up to $1,000.00 and/or sentenced for up to 5 years of incarceration. The corporate defendants may incur a fine of up to $1,000.00 upon conviction of mail fraud or wire fraud. The fair-market value of the cylinders converted is $292,643.40 (the judgment in Count V, less the pre- judgment interest added by the triai court). Never- theless, each judgment entered on the RICO Counts is $2,168,062 plus attorney’s fees, for a total of $2,546,232.58. Certainly, imposing a liability of $2,253,589.18 upon the defendants in excess of the value of the property taken (or in other words, almost 9 tines the fair-market value of the property taken) can only be considered an additional penalty for com- mission of the underlying predicate acts. Compara- tively, the corporate defendants could only be fined $1,000.00 for mail and wire fraud, yet, under RICO they have an additional punishment of $2,253,589.18. The individual defendants could be imprisoned un- der the wire fraud and mail fraud statutes up to five years in addition to the fines imposed. Individual lib- erty has an incalculable value. However, a penalty of $2,253,589.18 defies the grasp of most ordinary cit- izens. Under Boyd and One 1958 Plymouth Sedan, RICO is a quasi-criminal act in its potential operation and effect upon the defendants. 18 In Sedima, this Court discussed the quasi-criminal nature of RICO, but was not directly faced with the issue, at 473 U.S. pages 492 and 493: Finally, to the extent an action under §1964(c) might be considered quasi-criminal, requiring pro- tections normally applicable only to criminal pro- ceedings, cf. One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 698, 14 L.Ed.2d 170, 85 S.Ct. 1246 (1965), the solution is to provide those protections, not to ensure that they were previ- ously afforded by requiring prior convictions. (Footnote omitted). Civil enforcement of RICO internally requires a quasi-criminal nature. This Court in Sedima stated at 473 U.S. at page 488: [T]he predicate acts involve conduct that is ‘chargeable’ or ‘indictable’, and ‘offense[{s]’ that are ‘punishable,’ under various criminal statutes. §1961(1). As defined in the statute, racketeering activity consists not of acts for which the defendant has been convicted, but of acts for which he could be. If liability is predicated upon acts for which the defendants could be criminally convicted, how can it be determined whether these acts could result in a conviction unless the trier of fact makes those find- ings based upon the same criteria as in a criminal proceeding? There is a recognizable social stigma which attaches in criminal proceedings which plays a prime impor- tance to the defendants. In In re Winship, 397 U.S. 358 (1970), this Court stated at 397 U.S. pages 363 and 364: The accused during a criminal prosecution has at stake interests of immense importance, both be- cause of the possibility that he may lose his lib- erty upon conviction and because of the certainty that he would be stigmatized by the conviction. Accordingly, a society that values the good name and freedom of every individual should not con- demn a man for commission of a crime when there is reasonable doubt about his guilt. The stigma society places on a defendant in certain ‘civil’ actions is an important consideration in ana- lyzing the nature of the proceeding as this Court stated in Addington v. Texas, 441 U.S. 418 (1979), at 441 U.S. pages 425 and 426: Moreover, it is indisputable that involuntary com- mitment to a mental hospital after a finding of probable dangerousness to self or others can en- gender adverse social consequences to the indi- vidual. Whether we label this phenomena ‘stigma’ or choose to call it something else is less impor- tant than that we recognize that it can occur and that it can have a very significant impact on the individual. A defendant in a RICO case risks the social stigma of being labeled a ‘‘racketeer’’, a pejorative term which connotes organized crime. Our society has more than a minimal interest in the outcome of private civil RICO suits. The size of the potential penalty is stag- gering and far exceeds the criminal fines which could be imposed. The social stigma of being labeled a ‘‘racketeer’’ effects every-day life. Potential penalties have -a devastating economic effect on business defendants. In this case the plaintiff and two of the 20 defendants are competitors. Unbridled RICO claims may reduce competition by driving competitors from the market place. Indeed, RICO was designed to pre- vent the infiltration of legitimate businesses by or- ganized crime. Instead, RICO is turning ordinary contract disputes (as is this case) into quasi-criminal proceedings. Society’s interests should be considered in applying RICO. The plaintiff already has the ability to obtain compensation for damages it suffers under traditional tort and contract claims. RICO does not provide recovery for a victim that otherwise would go uncompensated. RICO only adds a penalty against the defendant to the compensation the victim re- ceilves. In order to impose civil liability under RICO a vic- tim must show that the defendant committed two predicate acts within a ten-year period. If RICO was designed to compensate victims, why did Congress not provide for compensation of the first victim? Why must the first victim wait up to ten years to see if the defendant commits another predicate act? The an- swer is obvious. Congress did not intend RICO to be a compensation act for victims. Congress intended to punish the repeat offender, the habitual criminal. The civil RICO action is truly an enhanced penalty for the commission of certain offenses enumerated in 18 U.S.C. §1961. Congress sought to punish the repeat offenders of those offenses and deter further com- mission of those offenses. In Tellis v. United States Fidelity & Guaranty Company, 805 F.2d 741 (7th Cir 1986) vacated, 107 S.Ct. 3255 (1987), the Seventh Circuit stated at page 746: This Court has previously held that a treble dam- age antitrust suit is most appropriately charac- 21 terized as an action for a penalty. ... (citations omitted.) Because a civil RICO claim is best char- acterized as an action for treble damages, and such an action is penal in nature, Electronic Re- lays, 610 F.Supp. at 652, ... Professor Towers of the Marquette University Law School wrote in Burden of Proof in RICO Actions: Does ‘Sedima’ Provide Guidance? The National Law Journal, December 2, 1985, at page 26: Closer scrutiny yields the conclusion that many civil RICO actions are quasi-criminal in nature because they contain those punitive sanctions and stigma characteristic of criminal actions that nor- mally require criminal protections, and therefore, make the criminal burden of proof most appro- priate. 99 It is well established that in certain “‘civil’’ cases, where the gravamen is unquestionably criminal (or penal) in nature, that the defendant has certain pro- tections which would also be afforded to him as if the case were tried as a criminal trial. See Lees v United States, 150 U.S. 476 (1898). Plaintiffs in civil actions to enforce RICO should be required to prove the commission of the predicate acts beyond a reasonable doubt. RICO does not expressly set forth the standard of proof to be utilized in the private enforcement action as authorized. Tradition- ally, therefore, what standard of proof should be ap- plied is a question left to the courts. Stontosky v. Kramer, 455 U.S. 745 (1982). In Sedima, this Court did not decide the issue of the proper standard of proof to be used in the civil enforcement of RICO. Applying a “‘civil’’ label to an action does not deter- 22 mine the proper standard of proof to be applied. Ad- dington v. Texas, supra, and In re Winship, supra. In this case, the quasi-criminal and penal nature of the civil enforcement of RICO constitutionally man- dates the beyond a reasonable doubt standard of proof. At the very least, the ‘“‘clear and convincing” standard of proof for fraud actions should have been applied. Further, the defendants should have been granted a twelve-member jury and other rights af- forded criminal defendants. III. BRIDGES WELDING SHOULD NOT BE VICAR- IOUSLY LIABLE UNDER RICO This case raises an important issue concerning the use of “‘vicarious liability’’ to hold corporations, pe- ripheral to the alleged scheme, liable for the acts of the principals. Bridges Welding was not incorporated until approximately the time the alleged scheme ended, and it never did any business during the ex- istence of the alleged scheme. At trial, it was undisputed that Bridges Welding did not have a corporate existence until its incorpo- ration on April 20, 1983. (Transcript V. 5, p.80). The first meeting of shareholders was held on May 7, 1988. (Transcript V. 5, p.80). Bridges Welding had no bank accounts and did not commence business until the latter part of July or early August, 1983. (Tran- script V. 12, p.33). Moreover, Ray Bridges received only a minority interest in Bridges Welding. (Tran- script V. 12, pp.25-26, 36-38; V. 5, p.80). The majority shockholders were not defendants in this case, nor where they charged with the commission of any pred- icate acts or with conspiracy to commit any of the predicate acts. (Plaintiff’s Exhibits 61-69). Except for Ray Bridges, no other officer or director was a 23 defendant in these proceedings. Likewise, except for Ray Bridges, no such person was alleged to have been a part of the alleged scheme, and, as to Ray Bridges, he was a defendant only for acts allegedly done prior to Bridges Welding’s commencement of business in July-August, 1983. In addition, it was clear from the testimony at trial that the last alleged fraudulent act occurred on or within a few days of May 25, 1988. (Plaintiff's Ex- hibits 1 and 2-1 through 2-61). Bridges Welding did not use Liquid Air cylinders and, under the scheme charged, could not have had possession of any Liquid Air cylinders. For Bridges Welding, the Seventh Circuit did not reach the question of whether subsections (c) and (d) of §1962 of RICO should have been affirmed. Instead, the Seventh Circuit applied ‘‘vicarious liability”’ to af- firm the judgment against Bridges Welding under subsections (a) and (b) of §1962 which involved the anti-dated acts of Ray Bridges. (app. 16a). Application of vicarious liability was proper, the court held, be- cause Bridges Welding had “‘benefit from the viola- tions’. Assuming that Bridges Welding was vicariously li- able for the acts of Ray Bridges, only one alleged predicate act occurred after the date of incorporation. Accordingly, for RICO purposes, there could be no “pattern of racketeering activity’ during the time period that Bridges Welding stood respondeat supe- rior to Ray Bridges. There are inherit dangers in applying RICO vicar- iously to corporations. Haroco v. American National Bank & Trust Co. of Chicago, 747 F.2d 384 (7th Cir. 24 1984), affd. 473 U.S. 606 (1985). Here, a completely legitimate business has been held liable under RICO. It now owes treble damages for the alleged acts of its minority shareholder and officer. Such a result was never intended by Congress. The Seventh Circuit Court of Appeals has also broadened the language of subsections (a) and (b) of §1962 of RICO. Subsection (a) requires proof that income from the racketeering activity be used or in- vested in the enterprise. Whereas, subsection (b) re- quires that the defendant, through a pattern of racketeering activity, acquire or maintain an interest in the enterprise. The holding in this case, namely that the corporation need only “‘benefit’’ from the violations, greatly expands that statutory language of the RICO Act. It broadens the RICO Act to include many non-intended defendants under the statute. This unwarranted and broad expansion of the RICO Act warrants this Court’s review of the Seventh Circuit’s decision. IV. THE VERDICT, AS TREBLED, VIOLATES THE CONSTITUTIONAL PROTECTION OF THE EIGHTH AMENDMENT This case raises an important constitutional issue concerning statutory ‘“‘punitive’’ damages. The pur- poses served by RICO punitive damages are: First, to punish the defendants for their acts, and second, to warn and to deter others from the same type of conduct. These are the classic objectives of criminal law. As set forth above, ironically, the defendants in this case are punished economically more severely than if this action would have been prosecuted crim- inally. The defendants face a punitive damages award almost nine times that of the fair-market value of the cylinders allegedly converted without the protection of the Fifth and Sixth Amendments, and in contrav- ention of the Eighth Amendment to the Constitution of the United States. The Eighth Amendment pro- hibits the imposition of “‘excessive fines’. This Court has looked with disfavor on punitive damage awards in numerous civil cases. In 1979, this Court stated in Electrical Workers v. Faust, 442 U.S. 42 (1979) at page 50, that ‘“‘because juries are accorded broad discretion both as to the imposition and amount of punitive damages, ... the impact of these windfall recoveries is unpredictable and potentially substantial’. Justice Rehnquist, writing for himself, Chief Justice Warren Burger and Justice Powell, stated in Smith v. Wade, 461 U.S. 30 (1983), at page 59: Moreover, although punitive damages are ‘‘quasi- criminal,” ... their imposition is unaccompanied by the types of safeguards present in criminal proceedings. .. . [T]he alleged deterrence achieved by punitive damage awards is likely outweighed by the costs—such as the encouragement of un- necessary litigation and the chilling of desirable conduct—flowing from the rule, at least when the standards on which the awards are based are ill- defined. This Court stated in dicta in Aetna Life Insurance Co. v. Lavoie, 475 U.S. 813, 89 L.Ed.2d 823 (1986) at 89 L.Ed.2d page 837: (T]hat a $3.5 million punitive damage award is impermissable under the Excessive Fines Clause of the Eighth Amendment; ... these arguments raise important issues which, in an appropriate setting must be resolved. 26 The treble damage provision of RICO imposed a catastrophic effect upon the defendants herein in vi- olation of their Eighth Amendment protection against excessive fines. (See dissent in Ingraham v. Wright, 430 U.S. 651 (1977)). The Insurance Litigation Re- porter, October, 1985, through February, 1986, issue at page & presents a background on the Eighth t is noteworthy that the brief debate on the Excessive Fines Clause at the First Congress im- mediately followed the debts in the House over the proposed Fifth Amendment. Because the Fifth Amendment contained language that could have been construed to apply cutside the context of criminal proceedings, Representative Lawrence proposed, and the House adopted, language to confine the clause ‘to criminal cases.’ If the fra- mers of the Eighth Amendment had intended that its clauses not apply in civil proceedings, a similar amendment presumably would have been pro- posed. Moreover, an examination of the historical an- tecedents to the Excessive Fines Clause supports the contention that it should be applied to pu- nitive damage awards. The lineage of the Ex- cessive Fines Clause can be traced to the ‘excessive amercement’ provision of the Magna Carta. ‘Amercements’ were additional punish- ment for defendants in civil cases in Thirteenth Century Engiand. In 1689, the English Bill of Rights incorporated the ‘excessive amercement’ principle of the Magna Carta. That provision was, in turn, incorporated into Article I, §9 of the Virginia Declaration of Rights, and then into the 27 Eighth Amendment. Thus, punitive damages are of the same character as the remedies that the linear antecedents of the Eighth Amendment in- tended to limit. Currently this Court is considering Banker’s Life & Casualty Co. v. Crenshaw, 483 So.2d 254 (Miss. 1986), petition for cert. granted, No. 85-1765. That case presents the question of the constitutionality of common law punitive damages. For the same reasons raised in Banker’s Life and as set forth above, this Court should grant a Petition for Writ of Certiorari to review the constitutionality of the treble damages awarded to plaintiff. V. THE WRONG MEASURE OF DAMAGES WERE USED BY THE COURTS BELOW Nowhere in RICO does the statute define the cor- rect measure of damages. Congress directed only that ‘‘fa]lny person injured in his business or property by reason of a [RICO] violation ... may sue therefor . . and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee.’ 18 U.S.C. §1964(c) (Emphasis added) (app. 49a). This case, with its full record, presents this Court with the unique opportunity to determine the correct measure of damages for civil RICO. In RICO, an error in the underlying judgment is magnified by the trebling of damages. Here, for ex- ample, the difference in the measure of damages (be- tween conversion and contract amount the court used) is approximately $430,000. After trebling, it com- pounds to approximately $1.29 million. Such an error in the verdict has, and will continue to have, dev- astating effects upon the RICO defendants, making 28 them the ‘“‘victim’”’ of this federal action rather than the alleged perpetrators. The prevailing philosophy of determining RICO damages should be that the ‘“‘compensable injury nec- essarily is the harm caused by predicate acts suffi- ciently related tc constitute a pattern. .. .”’ (Sedima, 473 U.S. at page 497). Accordingly, the plaintiff would recover only to the extent that he has been injuried by the conduct constituting the violation. (Sedima, 473 U.S. at page 496). By what measure the plaintiffs were damaged is a question of law that should not be decided by the perceived need for uniformity. The varying nature of the enumerated predicate acts defy a uniform char- acterization for a singular measure of damages. In- stead, the court should be directed to the gravamen of the action. In this case, the Seventh Circuit looked to what it perceived as the loss of the plaintiff to determine the appropriate measure of damages. (app. 22a). This measure of damages, however, ignores the second part of this Court’s admonition in Sedima, 473 U.S. at page 497, that the measure of damages under civil RICO is the harm occasioned as a result of the pred- icate acts. One must not look solely to the perceived loss of the plaintiff as the Seventh Circuit did, but only to those losses which proximately flow from the predicate acts. In other words, one cannot look solely to the perceived loss of the plaintiff, but one must also look to the nature of the defendants’ actions and the context in which the claimed losses have arisen, i.e. the gravamen of the complaint. In this case, under respondent’s theory, cylinders were allegedly not returned by D & R. Hence, the gravamen of the action is the common law tort of conversion. It follows that the appropriate measure of damages is the fair-market value of the property converted. The trial court and Seventh Circuit re- jected this measure of damages. The overly-broad interpretation of the damages un- der RICO applied by the court of appeals in this case, which permit a plaintiff to recover threefold losses which are not viewed in the context of the alleged actions of the defendants, conflicts in principle with this Court’s decision in Sedima, as well as the nu- merous federal and state court decisions establishing the measure of damages in other similar conversion cases. This reason alone warrants that this Court re- view the Seventh Circuit’s decision. CONCLUSION This case presents this Court the opportunity to rule on many important issues concerning the civil enforcement of RICO with the benefits of a full and complete record. For the foregoing reasons, it is re- spectfully requested that a Writ of Certiorari issue to review the decision of the Court of Appeals for the Seventh Circuit. Respectfully submitted, FRANK H. BYERS II” JOHN L. GREENLEAF, JR. BYERS, BYERS & GREENLEAF, LTD 333 East Pershing Road Suite 100 T om 149 lilsn . RY Decatur. Illinois 62525 WILLIAM A. McCNvuTT** LOWE, MOORE, SUSLER. MCNUTT & WRIGLEY 250 North Water Street, P.O. Box 1527 | - _ lisea me ‘fs »s Decatur, Illinois 62523 “Counsel of Record for Jack R. Rogers, George Michlik and D & R Welding Suppiy Company ounsel of Record for Raymond E | Bp ageess Wold; Amr 4 | ayy " 7. 9 Bridges and Bridges elding Suppliv & APPENDIX la APPENDIX A 3n the United States Court of Appeals For the Seventh Circuit Nos. 86-3001 and 86-3046 LIQUID AIR CORPORATION, Plaintiff-Appellee, v. JACK R. RoGers, GEORGE MICHLIK and D & R WELDING SuPPLY COMPANY, an Illinois Corporation, and RAYMOND E. BRIDGES and BRIDGES WELDING SuppLy & THERAPY, INC., Defendants-A ppellants. Appeals from the United States District Court for the Centra! District of Illinois, Peoria Division. No. 84-C-1110—Michael M. Mihm, Judge. ARGUED JUNE 2, 1987—DecIDED NOVEMBER 18, 1987 Before BAUER, Chief Judge, CoFFEy, Circuit Judge, and ESCHBACH, Senior Circuit Judge. BAUER, Chief Judge. This case raises several issues with respect to civil enforcement of the Racketeer Influ- enced and Corrupt Organizations Act, 18 U.S.C. § 1962 (“RICO”), including (1) what standard of proof should gov- ern civil RICO actions; (2) whether a series of fraudulent acts in a single scheme, with a single victim, satisfies RICO’s requirement of a “pattern of racketeering activ- ity;” (3) to what degree may vicarious liability be imposed 2a under civil RICO; (4) the appropriate measure of damages under RICO; and (5) whether any set-off should be sub- tracted before or after trebling the damage award under RICO. D & R Welding Supply Company (“D & R”) leased compressed gas cylinders from Liquid Air Corporation (“Liquid Air’’). Through a series of fraudulent shipping orders, D & R made it appear that it had returned over 3,000 cylinders to Liquid Air. A jury found all defendants guilty of civil RICO and pendent state torts. In addition to the RICO issues, defendants challenge the sufficiency of the evidence, various evidentiary rulings and various jury instructions. For the reasons that follow, we affirm “the judgment entered in all respects. ‘ D & R is a partnership operated by Jack R. Rogers and George Michlik to distribute welding supplies. D & R operates out of Decatur, Streator and Urbana, Illinois and is involved in interstate commerce. Among other supplies, it distributed compressed gas. In order to distribute the gas, D & R leased both compressed gas and compressed gas cylinders from Liquid Air. As a result of price in- creases, D & R gave notice that it would terminate its distributorship with Liquid Air, effective September, 1981. Under its Distributor Agreement with Liquid Air, D & R was required to return leased gas cylinders to Liquid Air, pay rent on outstanding cylinders and pay the replace- ment value for any cylinders not returned or accounted for. The monthly rental fee then in effect was $2.25 per cylinder; the average replacement cost per cylinder was $150. D & R was slow in returning the cylinders after it ter- minated its distributorship. By August, 1982, D & R had returned only 1,570 of 5,000 outstanding cylinders. At this point, Liquid Air began to charge D & R its higher, non- distributor rental rate. Just after Liquid Air raised its rate, Michlik and Rogers became more creative in their business dealings. They enlisted the aid of Ray Bridges, an employee of Liquid Air responsible for handling all paperwork at Liquid Air’s Peoria Distribution Center. Under the scheme, Bridges would falsify documents so that it would appear that D & R had returned all outstand- ing cylinders. D & R would thus save the renta! and re- placement fees while retaining the cylinders for its own use. The scheme was accomplished through nineteen sepa- rate falsified shipping orders documenting returns that had never been made. Each shipping order involved using the mails twice and one wire transfer. In return for Bridges’s “‘work’’, Michlik and Rogers ar- ranged to set Bridges up in his own welding business in Peoria. They supplied Bridges with personnel, capital and welding products. Michlik and Rogers derived an addi- tional benefit from this pay-off to the scheme. Michlik and Rogers were prevented from openly expanding their busi- ness into Peoria because of a non-competition agreement with A. W. Moore Welding in Peoria (‘‘Moore Welding’’). By setting Bridges up in the welding business in Peoria, Michlik and Rogers could not only bilk Liquid Air of its cylinders, but could also circumvent the non-competition agreement through their participation in Bridges Welding. In August, 1983, Liquid Air employee Lauren “Bud’’ Sage became suspicious after hearing that Ray Bridges was seen removing Liquid Air cylinders from the Liquid Air Peoria Distribution Center, supposedly with Sage’s okay. Sage initiated an investigation to determine whether D & R had actually returned the cylinders it had leased from Liquid Air. Sage compared Liquid Air’s inventory of cylinders on paper to the physical inventory taken in Peoria for July, 1983. The comparison revealed a discrep- ancy of 3,307 cylinders between those that Liquid Air ac- tually possessed and those that its internal documents registered. On April 4, 1984, Liquid Air filed a five-count complaint against Michlik, Rogers, D & R, Ray Bridges and Bridges Welding Supply (“Bridges Welding’’), which was amended in September, 1984 to include two additional counts. The complaint charged separate RICO violations of 18 U.S.C. § 1962(a), (b), (c) and (d) (Counts I & II, III and IV); con- 4a version (Count V); breach of fiduciary duty by Ray Bridges (Counts VI and IX); inducement to breach a fiduciary rela- tionship by Michlik, Rogers and D & R (Count VII); and conversion of miscellaneous business supplies by Ray Bridges and Bridges Welding (Count VIII). The predicate acts for the RICO counts were mail fraud, 18 U.S.C. § 1341, and wire fraud, 18 U.S.C. § 1343. The ensuing jury trial lasted approximately two and one- half weeks. The jury found against all the defendants on the RICO counts and on one count of conversion. In ad- dition, the jury found that Ray Bridges had breached his fiduciary duty to Liquid Air in participating in the scheme and that Michlik, Rogers and D & R had induced the breach. The jury returned a verdict for defendant Ray Bridges on the breach of fiduciary duty and conversion associated with the miscellaneous missing business sup- plies. The jury assessed $750,000 in compensatory dam- ages on all four RICO counts.! On the conversion count, the jury assessed $350,000 in actual damages and punitive damages in the following amounts: $25,000 against D & R; $15,000 against Bridges Welding; $10,000 against Rogers; $10,000 against Michlik; and $5,000 against Bridges. On the claim that Ray Bridges had breached his fiduciary duty, the jury assessed $4,000 in actual damages and $1,000 in punitive damages against Ray Bridges. For in- ducing Ray Bridges to breach his fiduciary duty, the jury assessed $750,000 in actual damages and $10,000 each in punitive damages against D & R, Michlik and Rogers. Some- time after the trial, the defendants returned 530 Liquid Air cylinders and the court ordered that the rental and replacement value of the 530 cylinders be subtracted from the total trebled damage award. Defendants charge numerous bases for overturning the jury verdicts, which may be grouped as follows: (1) wheth- 1 Liquid Air’s actual recovery was limited to the greatest single recovery under any one count, i.e., treble damages under any of the RICO counts. er the district court used the proper standard of proof; (2) whether the evidence supports a finding that defen- dants engaged in a “pattern of racketeering activity;” (3) whether i, is a proper basis for civil liabil- ity; (4) whether Bridges Welding was properly found vi- cariously liable for conversion or RICO; (5) whether the evidence was sufficient to support the adverse jury ver- dicts; (6) objections to various evidentiary rulings; (7) ob- jections to various jury instructions; (8) damages. We ad- dress each of defendants arguments in turn. Il. RICO The Racketeer Influenced and Corrupt Organization Act, 18 U.S.C. §§ 1961-1968 (“RICO”), was designed to pre- vent organized crime from gaining a stronghold in legiti- mate businesses. Statement of Findings and Purpose, Organized Crime Control Act of 1970, Pub. L. 91-452, 84 Stat. 922, 922-23 (1970). The Act prohibits various forms of infiltration of legitimate business “enterprises” involved in interstate commerce through a “‘pattern of racketeer- ing activity.” 18 U.S.C. § 1962. Section 1964 of the Act provides for civil suits arising out of § 1962 RICO violations. ; Standard of Proof Defendants argue that civil RICO proceedings are quasi- criminal in nature, and that the court therefore should have imposed a higher standard of proof than a mere pre- ponderance of the evidence. In Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479 (1985), the Supreme Court left undecided the question of the proper standard of proof to be used in civil RICO cases. Jd. at 491. Still, there is a strong suggestion in Sedima that the appropriate standard of proof in civil RICO is proof by a preponder- ance of the evidence. The court noted: We are not at all convinced that the predicate acts must be established beyond a reasonable doubt in a proceeding under § 1964(c). In a number of settings, conduct that can be punished as criminal only upon proof beyond a reasonable doubt will support civil sanctions under a preponderance standard. Id. Since Sedima, many lower courts have addressed the issue and have reached the conclusion that proof by a preponderance of the evidence is sufficient to establish a civil violation of section 1962. See Wilcox v. First In- terstate Bank of Oregon, 815 F.2d 522, 531 (9th Cir. 1987); Cullen v. Margiotta, 811 F.2d 698, 731 (2d Cir.), cert. denied, 107 S. Ct 3266 (1987); Armco Industrial Credit Corp. v. SLT Warehouse Co., 782 F.2d 475, 480-81 (5th Cir. 1986); United States v. Local 560, Int'l Bhd. of Team- sters, 780 F.2d 267, 279-80 n.12 (3d Cir. 1985), cert. denied, 106 S. Ct. 2247 (1986); Ford Motor Co. v. B & H Sup- ply, Inc., 646 F. Supp. 975, 1001 (D. Minn. 1986); Bosteve, Ltd. v. Marauszwski, 642 F. Supp. 197, 202 n.7 (E.D.N.Y. 1986); Owl Constr. Co., Inc. v. Ronald Adams Contrac- tor, Inc., 642 F. Supp. 475, 477 (E.D. La. 1986); Platsis v. E.F. Hutton & Co., 642 F. Supp. 1277, 1309 (W.D. Mich. 1986); Stainton v. Tarantino, 637 F. Supp. 1051, 1070 (E.D. Pa. 1986). The standard of proof in a given case “serves to allocate the risk of error between the litigants and to indicate the relative importance attached to the ultimate decision.”’ Ad- dington v. Texas, 441 U.S. 418, 423 (1979). Because society has a deep interest in not imprisoning the innocent and because we recognize the stigma that attaches from a criminal conviction, we require the government to prove guilt beyond a reasonable doubt. Jd. The requirement of proof beyond a reasonable doubt in a non-crirninal case is extremely rare. See In re Winship, 397 U.S. 358 (1970) (juvenile delinquency adjudication requires proof beyond a reasonable doubt). Winship was based on the recogni- tion that an accused in a juvenile delinquency proceeding faces the possibility of losing his or her liberty and the subsequent stigma of a criminal conviction. Jd. at 367. | er Defendants argue that, like delinquency adjudications, civil RICO is quasi-criminal. This contention is without merit. A civil RICO defendant does not face imprisonment, nor does the defendant suffer the collateral consequences as- sociated with conviction of a criminal offense. While a civil RICO deferdant does face the opprobrium of being labeled a “racketeer,”’ it is not sufficiently stigmatizing to war- rant criminal protections.? See Sedima, 473 U.S. at 492 (‘As for stigma, a civil RICO proceeding leaves no greater stain than do a number of other civil proceedings.’’) The clear and convincing evidence standard is an inter- mediate standard of proof, requiring more than proof by a preponderance of the evidence but less than proof be- yond a reasonable doubt. It is used in civil cases in which more is at stake than mere loss of money. See, e.g., San- tosky v. Kramer, 455 U.S. 745 (1982) (termination of parental rights); Addington v. Texas, 441 U.S. 418 (civil commitment); Woodby v. INS, 385 U.S. 276 (1966) (depor- tation); Chaunt v. United States, 364 U.S. 350 (1960) (de- naturalization). Under common law, allegations of fraud required proof of clear, cogent and convincing evidence, due to the fear that such claims could be fabricated easily. See Herman & MacLean v. Huddleston, 459 U.S. 375, 388 n.27 (1983). Many states, including Illinois, require allega- tions of fraud to be proven by clear and convincing evi- dence. See, e.g., Nat'l Republic Bank of Chicago v. Nat'l Homes Construction Corp., 63 Ill. App. 3d 920, 3x1 N.E.2d 15 (1978). Defendants argue that since mail and wire fraud furnish the predicate acts for the RICO viola- tions, plaintiff should have to prove its allegations by clear and convincing evidence. We believe the argument is fore- closed by the Supreme Court’s reasoning in Herman & MacLean v. Huddleston, 459 U.S. 375 (1983). In Hud- dleston, the Supreme Court declined to require proof by 2 For the same reasons, we find no error in the district court’s denial of defendants’ motion for all mghts afforded crimina! defen- dants. 8a clear and convincing evidence in a civil securities actren based on fraud. The Court noted: The interests of defendants in a securities case do not differ qualitatively from the interests of defen- dants sued for violations of other federal statutes such as the antitrust or civil rights laws, for which proof by a preponderance of the evidence suffices. On the other hand, the interests of plaintiffs in such suits are significant. Defrauded investors are among the very individuals Congress sought to protect in the securities laws. If they prove that it is more likely than not that they were defrauded, they should re- cover. Id. at 390. Although addressed to a different area of law, the reasoning of Huddleston is wholly applicable to the standard of proof issue in civil RICO cases. We can dis- cern no reasoned basis for distinguishing a federal secu- rities claim based on fraud from a civil RICO claim based on fraud as to warrant applying different standards of proof. Federal causes of action based on fraud which violates federal statutes are not to be governed by the State’s standard of proof for common law fraud. The mere presence of a treble damages provision does not mandate otherwise. See Ramsey v. United Mine Workers, 401 U.S. 302 (1971) (preponderance standard governs civil antitrust actions). Accordingly, we find that proof by a preponder- ance of the evidence is sufficient for a finding of liability under civil RICO. Pattern of Racketeering Activity Defendants contend that the proven acts do not amount io a pattern of racketeering activity under RICO. Defen- dants were found liable under subsections 1962(a), (b), (c), and (d).* All subsections require the government to show 3 § 1962. Prohibited activities (a) It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of rack- (Footnote continued on following page) Ga that defendants engaged in a pattern of racketeering ac- tivity. A pattern of racketeering activity requires at least two acts of racketeering activity within ten years. 18 U.S.C. § 1961/5). Racketeering activity includes mail and wire fraud, 18 U.S.C. §§ 1341, 1343. 18 U.S.C. § 1961(1). Plaintiff alleged that defendants engaged in a pattern of racketeering activity through fifty-seven separate acts of 3 continued eteering activity or through collection of an unlawful debt in which such person has participated as a principal within the meaning of section 2, title 18, United States Code, or use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is en- gaged in, or the activities of which affect, interstate or foreign commerce. A purchase of securities on the open market for purposes of investment, and without the intention of control- ling or participating in the control of the issuer, or of assisting another to do so, shall not be unlawful under this subsection if the securities of the issuer held by the purchaser, the mem- bers of his immediate family, and his or their accomplices in any pattern of racketeering activity or the collection of an un- lawful debt after such purchase do not amount in the aggre- gate to one percent of the outstanding securities of any one class, and do not confer, either in law or in fact, the power to elect one or more directors of the issuer. (b) It shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the ac- tivities of which affect, interstate or foreign commerce. (c) It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or par- ticipate, directly or indirectly, in the conduct of such enter- rise’s affairs through a pattern of racketeering activity or col- ection of unlawful debt. (d) It shall be unlawful for any person to conspire to violate any of the provisions of subsections (1a), (b), or (c) of this section. 10a mail and wire fraud over a seven month period,‘ injur- ing both Liquid Air and Bridges Weldings’s unwitting competitor, Moore Welding. In Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479 (1985), the Supreme Court noted that a pattern of rack- eteering activity required more than just two acts com- mitted within a ten year period; the acts must have “con- tinuity plus relationship which combines to produce a pattern.” Jd. at 496 n.14. Borrowing from another statute, the Court defined “pattern” as ‘criminal acts that have the same or similar purposes, results, participants, vic- tims or other methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.”’ Jd. Since Sedima, courts have wrestled with defining the concept of a pattern under RICO. Some courts required the predicate acts be part of two separate schemes before a pattern could be shown, see Superior Oil Co. v. Fulmer, 785 F.2d 252 (8th Cir. 1986); others had determined that a single scheme or episode was sufficient, Bank of America v. Touche Ross & Co., 782 F.2d 966 (11th Cir. 1986). In Morgan v. Bank of Wau- kegan, 804 F.2d 970 (7th Cir. 1986), we opted for a “mid- die course between thle] two extremes,” requiring the predicate acts to be “ongoing over an identifiable period of time so that they can fairly be viewed as constituting separate transactions.” Jd. at 975. In determining whether the predicate acts are sufficiently continuous and related, we urged courts to examine the following factors: the number and variety of predicate acts and the length of time over which they were committed, the number of vic- tims, the presence of separate schemes and the occurrence of distinct injuries. Jd. at 975. We noted however that “the mere fact that the predicate acts relate to the same overall scheme or involve the same victim does not mean ‘ Plaintiffs proved that the defendants prepared nineteen fraudu- lent returns. Each return resulted in two acts of mai] fraud and one act of wire fraud. lla that the acts automatically fail to satisfy the pattern re- quirement.” Jd. at 975-76. Thus, Morgan envisioned a fact- specific inquiry, in which no singie factor would be deter- minative. Marshall & Ilsey Trust Co. v. Pate, 819 F.2d 806, 809-10 (7th Cir. 1987). In Lipin Enter. v. Lee, 803 F.2d 322 (7th Cir. 1986), however, we noted that a single fraudulent scheme with one injury to one victim was rot transmuted into a federal case simply because it required several acts of mail and wire fraud to inflict the single injury. Accord, Marks v. Pannell Kerr Forster, 811 F.2d 1108 (7th Cir. 1987). Plaintiffs allege that defendants defrauded two victims: Liquid Air and Moore Welding. Although setting Bridges up in business was undoubtedly part of the scheme (the payoff), Moore was not injured as a direct resu!t of any of the predicate acts. Moore Welding was injured when D & R chose to pay Bridges by circumventing their non- competition agreement. Circumventing the agreement was not an alleged predicate act under RICO. Thus, for the purpose of establishing a pattern of racketeering activity, Moore Welding is not a victim. Therefore, we have a single scheme which lasted seven months and defrauded a single victim. The defendants committed nineteen separate acts, each resulting in use of the mails and use of the wire ser- vice. Each time an invoice was falsely prepared, it de- prived Liquid Air of its entitlement to rent or replace- ment value. Therefore, each act resulted in a distinct in- jury to Liquid Air and a concommitant benefit to D & R. We find that the repeated infliction of economic injury upon a single victim of a single scheme is sufficient to establish a pattern of racketeering activity for purposes of civil RICO. Accord, Sun Savings & Loan Ass’n v. Dier- dorff, 825 F.2d 187 (9th Cir. 1987), Sufficiency of the Evidence The defendants argue that the evidence was insufficient to prove that D & R did not actually return the 3,307 cylinders missing from Liquid Air’s Peoma facility. A jury verdict will be upheld “if a reasonable basis exists in the record to support the verdict.”” Hamilton v. Svatik, 779 F.2d 383, 388 (7th Cir. 1985). Defendants argue that Liq- uid Air used a flawed equation to determine that its paper inventory exceeded its actual inventory by more than 3,000. Testimony at trial showed that Liquid Air may not have counted “‘scrap”’ cylinders in assessing the actual in- ventory. Defendants postulate that the ignored ‘‘scrap’”’ cylinders may have been cylinders returned from D & R that were later transferred to a different Liquid Air facil- ity and “exchanged” for scrap cylinders. Defendants also argue that, according to their calculations, only 2,681 cylinders were not returned. Defendants merely present a plausible theory that the jury rejected. This is not a legitimate basis for overturning a jury verdict if the evi- dence was sufficient to support an opposing theory. The jury had sufficient evidence to support its finding that D & R never returned 3,307 cylinders. Liquid Air employee Bud Sage testified extensively regarding his method of determining the number of stolen cylinders. Sage’s calculations supported a determination that 3,307 cylinders were missing. Challenges to the calculations used go only to the weight to be accorded the testimony, a matter solely for jury determination. In addition, the evidence was more than sufficient to show that D & R actually falsified the shipping orders. The evidence showed various irregularities associated with the orders documenting D & R returns supposedly made between November, 1982 and June, 1983. While prior to November, 1982, returns were signed only by D & R’s regular drivers—and never by management—after Novem- ber 1982, all but two return orders were signed by D & R management. In addition, the number of cylinders re- turned per order tripled during the period in question. No employee of either Liquid Air or D & R could be found who had seen any of these returns. Perhaps more importantly, defendants offered implausible explanations for these irregularities. The defendants testified that the returns were made when no other employees were around 13a (except Bridges). This was directly contradicted by ..iquid Air’s employee time records. Bridges then explained that, in fact, the deliveries were made on days other than the date on the order because the orders were prepared either later or earlier and either post-dated or predated accordingly. This explanation was itself contradicted by further evidence of employee time records and Liquid Air’s (and Bridges’s) policy of using the actual date on the order form. Defendants contradicted themselves and each other. From all this, the jury was entitled to infer that D & R had falsified return orders and had wrongfully retained the missing 3,307 Liquid Air cylinders. Conspiracy Defendants also challenge the jury’s adverse finding with respect to the conspiracy count, section 1962(d). Defendants argue that there can be no civil liability based on conspiracy since there is no damage to plaintiff caused by the conspiracy alone. We need not reach either issue. The jury awarded $750,000 on each RICO count to be trebled. Were we to decide the conspiracy issues in defen- dants’ favor, it would not lessen the amount of compen- sation they must pay. Accordingly, we decline to address either issue. Cf. Spanish Action Comm. of Chicago v. City of Chicago, 766 F.2d 315, 321 (7th Cir. 1985) (declining to consider plaintiffs’ additional challenge where it would not increase amount of recovery). Liability of Bridges Welding Bridges Welding argues that it could not be liable for any RICO violation or for conversion since it did not have a corporate existence during the scheme. Bridges Welding was incorporated in April, 1983. Defendants’ scheme was not completed until thd end of May, 1983. Ray Bridges was a principal employee and president of Bridges Weld: ing while still employed at Liquid Air. A corporation may l4a be a “person” under RICO.5 18 U.S.C. §§ 1961(3); Haroco v. Am. Nat'l Bank & Trust Co. of Chicago, 747 F.2d 384, 400 (7th Cir. 1984), aff'd, 473 U.S. 606 (1985). A corpora- tion acts only through its agents. Under general agency rules, a corporation (principal) will be vicariously respon- sible for the wrongful acts of its employees (agents) when the acts are: (1) related to and committed within the course of employment; (2) committed in furtherance of the corporation; and (3) authorized or subsequently acquiesced in by the corporation. 10 W. FLETCHER, Cyclopedia of the Law of Private Corporations, § 4942 at 620-21. In falsifying returns, Ray Bridges acted as president of Bridges Welding and his acts redounded to the benefit of Bridges Welding shareholders. Bridges Welding ac- cepted the benefits of Ray Bridges’s wrongdoing. The jury was entitled to infer acquiescence. Vicarious liability, however, has only limited application to civil RICO to avoid holding vicariously liable a corpora- tion that was the victim of a RICO violation. See Parnes v. Heinold Commodities, Inc., 548 F. Supp. 20, 23-24 (N.D. Ill. 1982). To the extent that agency rules would require holding a legitimate, infiltrated business vicarious. ly liable, the rules are at odds with the clear congres- sional intent to protect such legitimate businesses. See Haroco, 747 F.2d at 400. To accommodate these concerns, we have noted that the doctrine may apply only when 1) the corporation has derived some benefit from the RICO violation and 2) imposing vicarious liability is not inconsistent with the intent of Congress. To assess the intent of Congress we look to the express language of the particular subsections. Jd. A RICO violation requires proof that a “person” (the defendant) acted with respect to an “enterprise” (the corporation) through a pattern of racketeering activity. If the language of the subsections 5 § 1961. Definitions (3) “person” includes any individual or entity capable of holding a legal or beneficial interest in property; ————— — "yy require that the “person’’ and the “enterprise” be distinct entities, then we can postulate that Congress intended that “enterprises” not be held vicariously liable as defen- dants. In this regard, we have noted a distinction between subsections (a) and (c). Subsection (a) prohibits a person from investing money received from a pattern of racke- teering in an enterprise engaged in interstate commerce. In Haroco, we noted that there was nothing in the lan- guage of subsection (a) that seemed to require that the liable “person” be a distinct entity from the “enterprise.” In other words, subsection (a), by its express language, encompassed circumstances under which the enterprise itself was guilty of wrongdoing. Thus, vicarious liability under subsection (a) is consistent with congressional in- tent, provided the corporation derived some benefit from the RICO violation. In contrast, the express language of subsection (c) has been read to proscribe vicarious liability. Haroco, 747 F.2d at 400; Parnes v. Heinold Commodities, Inc., 548 F. Supp. 20, 23-24 (N.D. Ill. 1982). Subsection (c) prohibits an em- ployee of an enterprise from operating the enterprise through a pattern of racketeering activity. We noted in Haroco that the language of subsection (c) clearly envi- sioned that the “person” (employee) and “enterprise” (em- ployer) be different entities. Accord Petro-Tech, Inc. v. Western Co. of N. Am., No. 86-3361, slip op. (8d Cir. July 13, 1987) (finding that subsection (c) was intended to govern only those situations in which the enterprise was the passive, innocent victim of RICO). Thus, vicarious liability should not be imposed under subsection (c) when a finding of liability would require the “person” and “enterprise” to be the same entity. Subsection (b) prohibits a person from acquiring an in- terest in an enterprise through a pattern of racketeering activity. Whether a single entity may be both a liable “person” and an “enterprise” under subsection (b) de- pends on whether the language of subsection (b) is more like (a) or (c). In Bruss Co. v. Allnet Communication Ser- vices, Inc., 606 F. Supp. 401 (N.D. Ill. 1985), the court — l6a found that subsection (b), like subsection (c), required that the ‘‘person’”’ and “enterprise” be distinct, reasoning that (b) requires the person to ‘‘acquire or maintain”’ an inter- est in an enterprise—similar to the requirement of subsec- tion (c) that the person be “employed by” an enterprise. We disagree. Subsection (a), which requires a person to invest income in an enterprise, does not require a separate entity for the “person” and the “enterprise.” See Masi v. Ford City Bank & Trust Co., 779 F.2d 397, (7th Cir. 1985). We can see no distinction between “investing in an enterprise” and ‘‘acquiring an interest in an enter- prise”’ sufficient to require separate entities for a subsec- tion (b) violation. Unlike subsection (c), which requires a relationship between the ‘“‘person” and the ‘“‘enterprise”’ (employer-employee), subsections (a) and (b) require only the use of an “enterprise” by a “‘person.” Accordingly, we ‘hold that, like subsection (a), subsection (b) does not re- quire the existence of an enterprise separate and distinct from the person sought to be held liable. Accord, Wilcox, 815 F.2d at 529. Respondeat superior is therefore entirely appropriate under both subsections (a) and (b), so long as Bridges Welding derived a benefit from the violations. There is substantial evidence that Bridges Welding benefitted from the RICO violation. In exchange for the ‘“‘work”’ of Bridges Welding’s president, D & R supplied Bridges Welding with the labor of defendant Rogers’s son and defendant Michlik’s nephew. A supplier of Bridges Welding, Gano Welding, billed D & R for supplies furnished to Bridges Welding. In addition, there was evidence of various “loans” from D & R to Bridges Welding on which D & R was, at best, not actively pursuing collection. Therefore, under both (a) and (b), Bridges Welding was properly found liable. Again, since addressing the propriety of the finding of vicarious liability under subsections (c) (under which re- spondeat superior may not apply) or (d) (conspiracy to violate (a), (b), or (c)), would not affect the amount of Liq- uid Air’s award, we decline to consider defendants’ chal- 17a lenges to these findings. Cf. Spanish Action Comm., 766 F.2d at 321. ITI. EVIDENTIARY RULINGS Defendants maintain that the trial court prevented them from presenting their theory of defense. Defendants sought to convince the jury that no fraud had in fact occurred and that Liquid Air brought suit only to remove a new competitor (D & R) from the market. Defendants com- plain that the court excluded evidence that showed that Liquid Air had offered to finance an attempted ‘‘buy out” of a D & R competitor and that Liquid Air had divulged business secrets of D & R, mouled during discovery, in contravention of a stipulation not to reveal such informa- tion. Defendants argue that these pieces of evidence would show Liquid Air’s general malevolence toward D & R and Liquid Air’s desire to drive D & R out of business. The trial court has broad discretion in determining whether proffered evidence should be admitted or ex- cluded. See, e.g., United States v. Garver, 809 F.2d 1291, 1297 (7th Cir. 1987). Had the court admitted the excluded evidence, it would not be especially probative of the al- legation that Liquid Air’s true motives in bringing the suit were solely malevolent and that no fraud had oc- curred. The court excluded evidence of the alleged dis- covery abuse because the documents were not listed in the pretrial order, nor had the court been informed of them at any time prior to the proffer. In addition, the proffered evidence would delay the proceedings, requir- ing trial counsel’s testimony and possibly substitution of counsel. We find no abuse of discretion in the court’s determination that the relevance of the evidence was out- weighed by the danger of confusion and undue delay. Fep. R. Evip. 403. Defendants next object to the testimony of Gregory Alexander. Alexander was Liquid Air’s comptroller and testified to the fair market value of the cylinders as a a ii | 18a basis for the jury’s award on the conversion count.® Defen- dants argue that Alexander was not sufficiently qualified to give expert testimony on the matter. In admitting ex- pert testimony under FEp. R. Evip. 702, the trial judge has broad discretion and the determination will be af- firmed unless it is “manifestly erroneous.” United States v. Lundy, 809 F.2d 392, 394 (7th Cir. 1987); see also United States v. Davis, 772 F.2d 1339, 1343-44 (7th Cir.), cert. denied, 106 S. Ct. 603 (1985). As comptroller, one of Gregory Alexander’s duties was to determine the value of cylinders to be acquired, both new and used. The defendants objected to Alexander’s qualifications because he did not explain the procedures he used to determine market value nor the geographic locality of his expertise. The district court ruled that plain- tiff had established an adequate foundation, and that any questions regarding Alexander’s methodology or particular area of expertise were more appropriately addressed dur- ing cross-examination. This was hardly error. Experience and knowledge establish the foundation for an expert’s testimony; the accuracy of such testimony is a matter of weight and not admissibility. See Robinson v. Watts Detec- tive Agency, Inc., 685 F.2d 729, 739 (1st Cir. 1982), cert. denied, 459 U.S. 1105 and 459 U.S. 1204 (1983).7 rv. JURY INSTRUCTIONS Next, defendants object to various jury instructions given by the district court. Defendants contend that the 6 As opposed to the RICO counts, damages for conversion are properly limited to the fair market value of the converted items. People v. Rose, 19 Ill. 2d 292, 166 N.E.2d 566 (1969). 7 Defendants also object to the trial court’s refusal to allow defen- dants to explain the treble damage provision of RICO to the jury. Such information is irrelevant to a jury’s deliberations and may confuse or prejudice the jury. It is properly excluded. Cf. Heatransfer Corp. v. Volkswagenwerk A.G., 553 F.2d 964 (C.A. Tex. 1977), cert. denied, 434 U.S. 1087. KK 19a trial court’s instructions defining ‘‘pattern of racketeer- ing activity” and ‘‘association-in-fact” were erroneous. In addition, defendants object to the court’s failure to admin- ister special interrogatories offered by the defendants. In judging a challenge to a particular jury instruction, we must determine only whether the instructions overall, conveyed the “correct message’”’ to the jury. Wilk v. Am. Medical Ass’n, 719 F.2d 207, 218-19 (7th Cir. 1983), cert. denied, 467 U.S. 1210 (1984). The trial judge informed the jury that in order to find a “pattern of racketeering ac- tivity,” it must find, [t}wo or more acts of racketeering activity which were related by a common scheme, plan or motive. It may not simply be a series of disconnected acts. Therefore, proof of two acts of racketeering activi- ty, without more does not establish a pattern. The instruction comports with the general requirements of the statute as interpreted since Sedima. Defendants object because the charge failed to advise the jury that there be “some continuing threat of racketeering activity.” Defendants argue that the continuity requirement of Sedima mandates that there be a threat that defendants would engage in future acts of racketeering after com- pletion of their scheme. This is an untenable interpreta- tion of the requirement of continuity. The requirement of continuity was not intended to force a court to guess the likelihood of future criminal conduct nor was it in- tended to proscribe liability for completed schemes. Con- tinuity refers instead to the duration of the predicate acts. The trial court was correct in refusing the proffered in- struction. Defendants next contend that the jury was not in- structed that it must find the existence of an enterprise before imposing liability. We find defendants’ objections obtuse. As to each RICO count, the court instructed the jury regarding each element of the subsection, including the enterprise requirement. The jury was instructed that it had to find that defendants had used income derived from 20a a pattern of racketeering to invest in an enterprise (sub- section a); acquired an interest in an enterprise through a pattern of racketeering (subsection b); and conducted the affairs of an enterprise through a pattern of racketeer- ing (subsection c). Apparently, defendants object to the court’s failure to specifically instruct the jury that it must find the existence of an enterprise. It is not necessary to give a proposed instruction “where the essential points are covered in another instruction.” United States v. Hansen, 701 F.2d 1215, 1218 (7th Cir. 1983). The instruc- tions, as given, adequately informed the jury that the exis- tence of an enterprise was essential to civil RICO liability. Defendants also claim as error the court’s failure to ad- minister special interrogatories proffered by defendants. Although initially expressing an interest in administering special interrogatories, the trial court determined that they were not necessary in light of cautionary instructions already given. When the court made this determination, defendants made no argument to enlighten the trial court regarding the necessity of special interrogatories, even in light of the cautionary instructions given; nor do they make such argument here. Simply voicing a general ob- jection is not sufficient. To preserve for review the issue of whether special interrogatories were required, defen- dants would have to have argued the issue below with specificity. See Sanchez v. Miller, 792 F.2d 694, 703 (7th Cir. 1986), cert. denied, 107 S. Ct. 933 (1987). Their failure to specify on appeal how the failure to administer special interrogatories prejudiced them compounds their error. We have considered the remainder of defendants’ chal- lenges to the jury instructions and find them to be similar- ly frivolous. V. DAMAGES Defendants challenge the jury’s damage awards on sev- eral bases, many of which are frivolous and will not be addressed here. The remaining challenges are: (1) that the 2la appropriate measure of damages for the RICO counts was only the fair market value of the cylinders and not con- tractual damages; (2) that the measure of damages for in- ducement to breach a fiduciary duty should be limited to the disloyal employees’s wages and benefits during the fraud: (3) that the award of prejudgment interest was im- prop: .. and (4) that the court should have subtracted any set-offs prior to trebling the awards. Appropriate Measure of Damages Under RICO Plaintiff was awarded $750,000 on each RICO count to compensate it for both the replacement value and the lost rental value of the cylinders. The court allowed the jury to determine the appropriate measure of compensation by looking to the contract between Chemtron Corporation (the predecessor in interest to Liquid Air) and Decatur Oxygen Products, Inc. (a wholly owned subsidiary of D & R), which provided that D & R would pay Liquid Air rent on all cylinders until they were returned or ac- counted for, and that D & R would pay Liquid Air the replacement value for any cylinders not returned. Defen- dants argue that contract damages were inappropriate and that under civil RICO, a court must look to the underly- ing nature of the predicate acts to determine the proper measure of damage. Since the underlying claim here is conversion, defendants argue, under Illinois law the ap- propriate measure of damages is only the fair market value of the cylinders. We have noted how futile it can be to employ a case-by-case approach in determining the “underlying” cause of action in civil RICO. See Tellis v. United States Fidelity & Guaranty Co., 805 F.2d 741 (7th Cir. 1986), vacated, 55 U.S.L.W. 3871 (1987). Although defendants now insist that the “‘underlying’”’ cause of ac- tion is conversion, they insisted as strongly that the ‘“un- derlying” cause of action was fraud in arguing for a “clear and convincing” standard of proof. The measure of damages under civi! RICO is the harm occasioned as a result of the predicate acts. Sedima, 473 U.S. at 497. A plaintiff injured by civil RICO violations » 22a deserves a “complete recovery.” Carter v. Berger, 777 F.2d 1173, 1176 (7th Cir. 1985). Although the contract only bound D & R and Liquid Air, the damages provided therein supply an appropriate measure of the degree to which Liquid Air was injured by the RICO violations. To restrict damages to the fair market value of the cylinders would deprive Liquid Air of its rights under the contract and would not compensate it for its losses. The damages that Liquid Air was entitled to under its contract with D & R provide the appropriate mezsure of full compen- sation. Lost Rent Defendants then challenge the jury’s award of lost rent, also provided for in the contract. Defendants equate lost rent with lost profits and note that Illinois does not allow recovery for lost profits in contract actions. The argument ignores the obvious distinction between lost rent and lost profits. Lost profits are not recoverable simply because they are speculative. The rent awarded was that due and owing at the time of conversion, and easily calculable. It was entirely appropriate to award lost rent. Set-off Plaintiffs first learned during discovery that D & R re- tained some Liquid Air cylinders. At that time, Liquid Air sought a protective order over the cylinders (then thought to number around 200) to ensure their preserva- tion. After post-trial motions were denied, defendants revealed that they had 530 Liquid Air cylinders, and sought to return them and accordingly set-off the judg- ment. The rental and replacement value of the belatedly returned cylinders was subtracted from the already trebled damages. Defendants argue that the cost of the returned cylinders should have been subtracted before trebling. While the return of the cylinders may compensate Liq- uid Air for the replacement value of the cylinders, it does not compensate it for rents lost prior to litigation. More 23a importantly, it does not negate the frauds perpetrated by defendants. We conclude that setting-off damages after trebling is more likely to effectuate the p ses behind RICO.® See, In re Nat’l Mortgage Equity ., 636 F. Supp. 1138, 1151 (C.D. Cal. 1986); ef lintkote Co v. Lys- fjord, 246 F.2d 368 (9th Cir.) cert. denied, 355 U.S. 835 (1957) (subtracting set-off after trebling in antitrust case). The judgment entered on the jury verdict and award of damages is affirmed in all respects. A true Copy: Teste: eee eee eee eeeees -- Clerk of the United States Court of Appeals for the Seventh Circuit ® Defendants challenge the treble damages provision of RICO as violative of the Eighth Amendment’s proscription against excessive fines. The ment has been flatly rejected with respect to anti- trust treble damages. See Berkey Photo, Inc. v. Eastman Kodak Co., 457 F. Supp. 404, 440 (S.D.N.Y. 1979), rev'd on other grounds, 603 F.2d 263 (2d Cir. 1979). The same reasoning applies here. Al- though there is some sense in which RICO treble damages are punitive, they are largely ee in the special sense that they ensure that wrongs will redressed in light of the recog- nized difficulties of itemizing damages. See Carter v. Berger, 777 F.2d 1173 (7th Cir. 1983). 24a APPENDIX B JUDGMENT—ORAL ARGUMENT United States Court of Appeals For the Seventh Circuit Chicago, Illinois 60604 November 13, 1987. Before Hon. WILLIAM J. BAUER, Chief Judge Hon. JOHN L. COFFEY, Circuit Judge Hon. JESSE E. ESCHBACH, Senior Circuit Judge Nos. 86-3001 and 86-3046 Liguip AiR CORPORATION, a Delaware corporation, Plaintiff-A ppellee, vs. JACK R. ROGERS, GOERGE MICHLIk, and D & R WELDING SuppLy ComPANY, an Illinois Corporation, and RAYMOND E. BRIDGES and BRIDGES WELDING SUPPLY & THERAPY, INC., Defendants-A ppellants. Appeals from the United States District Court for the Central District of Illinois, Peoria Division. No. 84 C 1110 MICHAEL M. MIHM, Judge This cause was heard on the record from the United States District Court for the Central District of Illinois. Peoria Division, and was argued by counsel. ennaneenneenenanmeeell 25a On consideration whereof, IT IS ORDERED AND AD- JUDGED by this Court that the judgment of the said District Court in this cause appealed from be, and the same is hereby, AFFIRMED, with costs, in accordance with the opinion of this Court filed this date. APPENDIX C United States Court of Appeals For the Seventh Circuit Chicago, Illinois 60604 December 10. 1987 ‘ Before Hon. WILLIAM J. BAUER, Chief Judg Hon. JOHN L. COFFEY, Circuit Judges Hon. JESSE E. ESCHBACH, Senior Circuit Judg: Nos. 86-3001 & 86-3046 JACK R. ROGERS, GEORGE MICHLIK and D & R WELDING SUPPLY COMPA an Illinois Corp and RAYMOND E. BRIDGES and BRIDGES WELDING SUPPLY & THERAPY, IN Defendants A ppe ant Appeals from the United States District Court for the Central District of Illinois, Peoria Division. ] MICHAEL M. MIHM, Judge ‘ ) « 27a ORDER On consideration of the petition for rehearing with sug- gestion for rehearing en banc filed in the above-entitled cause by Defendants-Appellants Jack R. Rogers, George Michlik and D & R Welding Supply Company, no judge in active service has requested a vote thereon, and all of the judges on the original panel have voted to deny the petition for rehearing. Accordingly, IT IS HEREBY ORDERED that the aforesaid petition for rehearing be, and the same is, DENIED. In addition, this court’s opinion of November 13, 1987, is hereby amended as follows: Page 2, line 14 should read: “D & R is an Illinois cor- poration in which two of the shareholders are Jack R. Rogers and George Michlik.”’ On page 8, in the last sentence of the text, replace “sovernment” with “plaintiff” IT IS SO ORDERED 28a APPENDIX D United States Court of Appeals For the Seventh Circuit Chicago, Illinois 60604 December 10, 1987 Before Hon. WILLIAM J. BAUER, Chief Judge Hon. JOHN L. COFFEY, Circuit Judge Hon. JESSE E. ESCHBACH, Senior Circuit Judge No. 86-3001 and 86-3046 Liguip AIR CORPORATION, Pla int iff-A ppellee 7 VS. JACK R. ROGERS, GEORGE MICHLIK and D & R WELDING SuppLy Company, an Illinois Corporation, and RAYMOND E. BRIDGES and BRIDGES WELDING SuppLy & THERAPY, INC., Defendants-A ppellants. Appeals from the United States District Court for the Central District of Illinois, Peoria Division. No. 84-1110 MICHAEL M. MIHM, Judge. ORDER This matter comes before the court for its consideration of the “‘Motion to Correct Clerical Mistake in Second 29a Amended Final Judgment” filed herein on June 1, 1987, by counsel for the plaintiff-appellee. On consideration thereof, IT IS ORDERED that said motion is GRANTED whereas those corrections have been considered and re- flected in this court’s opinion decided on November 18, 1987. 30a APPENDIX E United States District Court CENTRAL DISTRICT OF ILLINOIS 84-1110 Ligtip AIR CORPORATION V. RAYMOND E. BripGEs, JACK R. RoGersS, GEORGE MICHLIK. BRIDGES WELDING SuppPLy & THERAPY. INC. and D & R WELDING SupPLy Co. SECOND AMENDED JUDGMENT IN A CIVIL CASE — Jury Verdict. This action came before the Court for a trial by jury. The issues have been tried and the jury has rendered its verdict. X Decision by Court. This action came to trial or hearing before the Court. The issues have been tried or heard and a decision has been rendered. IT IS ORDERED AND ADJUDGED that the Judgment entered August 1, 1986 is amended to the following amounts: Count I $2,168,062.00 Count II $2,168,062.00 Count III $2,158,062.00 Count IV $2,168 ,062.00 Count V $ 347,444.40 Count VI $ 0.00 Count VII $ 668,062.00 This amended judgment under Counts IJ through IV re- flects the damages award after trebling, as amended by this Order, pursuant to a Second Amended Judgment Or- der entered on November 14, 1986. FILED JOHN M. WATERS, Clerk NOV 17 1986 U.S. DISTRICT COURT CENTRAL DISTRICT OF ILLINOIS November 17, 1986 JOHN M. WATERS Clerk /s/ LEONARD D. Brown (By) Deputy Clerk Leonard D. Brown 32a APPENDIX F UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF ILLINOIS No. 84-1110 Ligtuip AIk CORPORATION, a Delaware corporation, Plaintiff. wa RAYMOND BRIDGES, et al., Defendants. SECOND AMENDED JUDGMENT ORDER FILED JOHN M. WATERS, Clerk NOV 14 1986 U.S. DISTRICT COURT CENTRAL DISTRICT OF ILLINOIS This matter coming on to be heard upon the Order of this Court of October 14, 1986, directing the parties to determine the number of Liquid Air-owned cylinders held by Defendant D & R Welding. Inc. during the pendency of this cause and further directing said Defendant to re- turn those cylinders to Plaintiff; and it being represented to the Court that those cylinders, numbering 530, have been returned, IT IS HEREBY ORDERED that: The judgment entered August 1, 1986, is amended to reflect a set off for the return of 530 cylinders by the D & R Defendants to Liquid Air corporation and is hereby made final. The judgment is also amended to reflect the amount of prejudgment interest which the Court granted on Count V in its Order of November 13, 1986. The judg- 33a ment under each Count is amended to the following amounts: Count I $2,168,062.00 Count II $2,168,062.00 Count III $2,168,062.00 Count IV $2,168,062.00 Count V $ 347,444.40 Count VI g 0.00 Count VII $ 668,062.00 The set-off is based on a cylinder value of $154.60 per cylinder under Counts I through IV and VII and $108.22 per cylinder under Count V. The amended judgment under Counts I through IV re- flects the damages award after trebling, as amended by this Order. The Clerk is directed to enter an amended judgment, fine] as of the date of its entry, which reflects the amounts as amended above. It is so ordered this 14th day of November, 1986. /s/ MICHAEL M. Min Michael M. Mihm United States District Judge 34a APPENDIX G a IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF ILLINOIS PEORIA DIVISION No. 84-C-1110 Liquip AIR CORPORATION, a Delaware corporation, Plaintiff, -VS- RAYMOND E. BripGES, JACK R. ROGERS, GEORGE MICHLIk, BRIDGES WELDING SUPPLY & THERAPY, INC., an Illinois corporation, D & R WELDING SUPPLY Company, an Illinois corporation, Defendants. COURT DOCKET CONTINUATION PAGE 18, ENTRY DATED OCTOBER 14, 1986 Parties pres.by/c. via phone for Hearing on Post Trial Mots. Argument by/c. (#218 & #201)-Mots. DENIED in part & GRANTED in part. Magistrate’s Order of 5/6/85 is VACATED. Parties are directed to determine the # of cylinders & return them by 10/17/86 & counsel to submit by 10/22/86, a joint proposed 2nd amended judgment. 2nd Am. Judgment will be final upon its entry by Clerk. Atty. McNutt to reply to P.MO for Attys. fees & costs by 10/ 28/86. Counsel to confer re: how long hearing on P.MO for Attys. fees & costs will take and to notify Holly by 10/28/86 for scheduling of hearing on same. Oral mo. by all defts. to extend time to file certain documents—MO GRANTED until 10/17/86. (copy of docket sheet sent to atty. Howard by Clerk) (Mihm,J) 35a Excerpts from Trial Transcript dated October 14, 1986, Volume 20, Trial Court Docket No. 247 = Page 4: THE COURT: Okay, that’s fine. Let’s get into the post- trial motions then, defendants’ motions. Who is going to go first? Page 26-28: THE COURT: This is Judge Mihm speaking. Can you all hear me? First of all, Mr. McNutt I believe started out his argument by indicating that the Court had not actually had the opportunity to rule—or ruled on the question raised in terms of the failure of the plaintiff to prove the cylinder ioss. I think that the record does reflect at other points in the proceeding that by the denial of defendants’ motions to various points that that was a question for the jury to decide and they did decide it. In a few moments here will be getting into specifically the question of the redut- tion of the amount of cylinders that is claimed by the defendants. In terms of the counting of the cylinders, as to the junked cylinders, scrapped cylinders, my memory from the record is that it was the position of the plaintiffs that junked cylinders were not included on any inventory that was kept. And, of course, I think it is fair to say that the defendants argued that there may well have been some crossover between junked cylinders and non-junked cylin- ders. And it seems to me that was a question of fact for the jury to decide. Concerning this question of the state- ments made by Mr. Schopf in closing statement, I don’t think that statement or those statements that are claimed to have been made really change anything. The Court has added up the number of cylinders that appear on Plaintiff's 36a Exhibit No. 1. I did it very quickly, and so it may not be one-hundred percent accurate. But the figure that I came up with was 5,176, which is certainly in the ballpark of what was under discussion and the statements made by Mr. Schopf in terms of reductions from that don’t seem in any way to be inconsistent with the plaintiff's position in the case or in the award that was made by the jury. As to the $4,000 award against Mr. Bridges on the breach of fiduciary duty, I think in order to consider the implications of that one has to look at all of the verdicts that were returned. Mr. Bridges was a co-defendant with the other defendants in the earlier counts that dealt with the same subject matter—that is, the cylinders. And in every one of those other counts the award of the jury was the same; that is, $750,000.00, which is made up of the lost cylinders and the lost rental, if you want to call it that. I certainly can’t say specifically what was in the mind of those jurors when they set that award in the amount of $4,000.00. But I don’t think there is anything in that award in that particular count that as a matter of law creates verdicts that are inconsistent to the point where either some type of remittor [sic] or new trial would be required. It may well be, as the plaintiffs argued, that they felt sorry for him and since he was the only person named in that count that they chose that opportunity to reflect that, but that is speculation also. The argument that the lost rents were not a valid ba- rometer or component of damages, it seems to me that we went through this during the trial and I believe I recall in finding at that time that certainly it wasn’t necessarily the one that the jury would accept or it didn’t necessarily limit the plaintiffs to argue for other types of damages but that since the contract itself between the parties es- tablished that as a measure of damages that it was an appropriate measure of damages for the jury to consider, and I stil! feel that way. 37a As to the 259 cylinders that are presently in the pos- session of the defendant, it seems to me that the simple thing to do as to those cylinders would be to take that number and multiply it times 108. Is that the plaintiff's figure, 108? Page 32: THE COURT: The bottom line on all of this is that with the exception of the reduction reflecting the 259 cylinders, that all of the post-trial motions are denied. ad * 7: - Page 32-33: THE COURT: I would suggest this: I had indicated that this order of the Court would be final as of today and that the time for appeal would start running today. But it seems to me that this question has got to be resolved before it can be put to rest. So I would suggest that as quickly as possible to determine the number of cylinders and return them and so that the number returned is con- firmed, and then at that point I would ask counsel to tender to the Court hopefully a joint proposed amendment to the judgment. That’s without defendants having waived any of your objections previously made. But tender sug- gested wording to the Court on a modified judgment. Then when I get that I will enter it and then the judgment would become final as of that date. 7 * a * Excerpts from Trial Transcript dated November 14, 1986, Volume 21, Trial Court Docket No. 265. Page 3: THE COURT: Yes, we will set a date before you leave today. I would like to discuss this setoff question first and resolve that. I think I have read all the pleadings in the cases cited. I would be happy to consider very brief oral argument on that. Page 13: THE COURT: Well, I appreciate the arguments. As | said, I think it is not a very clear question, not easy to resolve. But as I said, my heart is with the defendant, but my head is with the plaintiffs. 1 believe that the defendant—or the plaintiff's arguments on this most ac- curately state the law. So the setoff will occur after the trebling. It will also apply to Count VI, which I guess will have the effect of reducing that to zero, right? 39a APPENDIX H UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF ILLINOIS No. 84-1110 Ligtip AIR CORPORATION, « Delaware Corporation, Plaintiff “VG- RAYMOND E. BripGes, JACK R. RoGERS, GEORGE MICHLIk, GEORGE [SIC] BRIDGES WELDING SuppLy & THERAPY, INC.., an Ill. Corp. and D & R WE LpING Supp.Ly Co., an Il. Corp. Defendants. JUDGMENT IN A CIVIL CASE Jury Verdict. This action came before the Court for a trial by jury. The issues have been tried and the jury has rendered its verdict. X Decision by Court. This action came to trial or hearing before the Court. The issues have been tried or heard and a decision has been rendered. IT IS ORDERED AND ADJUDGED that Plaintiff is entitled to Attorney’s Fees and Costs, and Judgment is hereby entered in favor of Plaintiff and against all Defendants for the sums of $378,170.58 for attorney’s fees and $51,412.17 for costs, through December 16, 1986: this Judgment entered pursuant to Stipulation filed herein De- cember 16, 1986. FILED JOHN M. WATERS, Clerk DEC 18 1986 U.S. DISTRICT COURT CENTRAL DISTRICT OF ILLINOIS 40a December 18, 1985 JOHN M. WATERS Clerk s’ LEonaRD D Brown _ (By) Deputy Clerk LEONARD D. BROWN 4la APPENDIX I IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF ILLINOIS PEORIA DIVISION No. 84-1110 Judge Mihm Liquip AIR CORPORATION, a Delaware corporation, Plaintiff, -VS- RAYMOND E. BRIDGES, JACK R. ROGERS, GEORGE MICHLIK, BRIDGES WELDING SuppLY & THERAPY, INC., an Illinois corporation, D & R WELDING Supp_y Company, an Illinois corporation, Defendants. FILED JOHN M. WATERS, Clerk DEC 16 1986 U.S. DISTRICT COURT CENTRAL DISTRICT OF ILLINOIS 12-16-86 Stipulation allowed Clerk to enter Judgment in the amounts stipulated. /s)/ MMM STIPULATION CONCERNING ATTORNEY'S FEES AND COSTS Plaintiff Liquid Air Corporation and defendants Ray- mond E. Bridges, Jack R. Rogers, George Michlik, Bridges Welding Supply & Therapy, Inc. and D & R Welding Sup- ply Company, by their respective undersigned attorneys, hereby stipulate as follows concerning Plaintiff's Petition for Attorney's Fees and Costs: 1. Plaintiff Liquid Air Corporation, is the prevailing party at trial on its claims for violations of RICO and for conversion, breach of fiduciary duty and inducement to 42a breach of fiduciary duty. As the prevailing party Liquid Air Corporation is entitled to its reasonable attorney's fees pursuant to 18 U.S.C. §1964(c) and to its costs pursuant to 18 U.S.C. §1964(c) and Rule 54(d) of the Federal Rules of Civil Procedure. 2. Plaintiff's reasonable attorney's fees through Decem- ber 16, 1986, are $378,170.58. 3. Plaintiff's reasonable costs through December 16, 1986, are $51,412.17. 4. Nothing in this stipulation shall be deemed a waiver or restriction of plaintiff's right to seek or receive rea- sonable attorney's fees and costs on appeal. 5. In the event that the judgment under any of the RICO claims is affirmed, in whole or in part, on appeal, defendants shall be liable to pay to plaintiff $378,170.58 in attorney's fees, exclusive of any attorney’s fees on appeal which the Court may award pursuant to 18 U.S.C. §1964(c). 6. In the event that the judgment under any of the claims is affirmed, in whole or in part, on appeal, defendants shal] be liable to pay to plaintiff (in addition to any attorney's fees as provided for in paragraph 5) $51,412.17 in costs, exclusive of any appeal costs which the Court may award. /s/ PauLa E. Litt One of the Attorneys for Plaintiff Liquid Air Corporation /s/ FRANK _H. Byers II] One of the Attorneys for Defendants Jack R. Rogers, George M. Michlik, and D&R Welding Supply Co. /s/ WittiaM A. McNutt Attorney for Defendants Raymond E. Bridges and Bridges Welding Supply & Therapy, Inc. 43a THE CONSTITUTION OF THE UNITED STATES OF AMERICA AMENDMENT V No person shall be held to answer for a capital, or oth- erwise infamous crime, unless on a presentment or in- dictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be de- ' prived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation. AMENDMENT VI In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously as- certained by law, and to be informed of the nature and cause of the accusation; to be confronted with the wit- nesses against him; to have compulsory process for ob- taining witnesses in his favor, and to have the Assistance of Counsel for his defense. AMENDMENT VIII Excessive bail shal] not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted. 44a 18 U.S.C. §§1961, 1962, 1963 AND 1964 RACKETEER INFLUENCED AND CORRUPT ORGANIZATION ACT $1961. Definitions As used in this chapter [18 USCS §§ 1961 et seq.]— (1) “racketeering activity’’ means (A) any act or threat involving murder, kidnaping, gambling, arson, robbery, bribery, extortion, or dealing in narcotic or other dan- gerous drugs, which is chargeable under State law and punishable by imprisonment for more than one year; (B) any act which is indictable under any of the following provisions of title 18, United States Code: Section 201 (relating to bribery), section 224 (relating to sports brib- ery), sections 471, 472, and 473 (relating to counter- feiting), section 659 (relating to theft from interstate shipment) if the act indictable under section 659 is fe- lonious, section 664 (relating to embezzlement from pen- sion and welfare funds), sections 891-894 (relating to extortionate credit transactions), section 1084 (relating to the transmission of gambling information), section 1341 (relating to mail fraud), section 1343 (relating to wire fraud), section 1503 (relating to obstruction of jus- tice), section 1510 (relating to obstruction of criminal investigations), section 1511 (relating to the obstruction of State or local law enforcement), section 1951 (relating to interference with commerce, robbery, or extortion), section 1952 (relating to racketeering), section 1953 (re- lating to interstate transportation of wagering para- phernalia), section 1954 (relating to unlawful welfare fund payments), section 1955 (relating to the prohibition of illegal gambling businesses), sections 2314 and 2315 (relating to interstate transportation of stolen property), sections 2341-2346 (relating to trafficking in contraband cigarettes), sections 2421-24 (relating to white slave 45a traffic), (C) any act which is indictable under title 29, United States Code, section 186 [29 USCS § 186] (deal- ing with restrictions on payments and loans to labor organizations) or section 501(c) [29 USCS § 501(c)] (re- lating to embezzlement from union funds), or (D) any offense involving bankruptcy fraud, fraud in the sale of securities, or the felonious manufacture, importation, re- ceiving, concealment, buying, selling, or otherwise deal- ing in narcotic or other dangerous drugs, punishable under any law of the United States; (2) ‘State’? means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, ‘any territory or possession of the United States, any political subdivision, or any department, agency, or in- strumentality thereof; (3) “person” includes any individual or entity capable of holding a legal or beneficial interest in property; (4) “enterprise’’ includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity; (5) “‘pattern of racketeering activity”’ requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter [enacted Oct. 15, 1970] and the last of which occurred within ten years (excluding any period of imprisonment) after the com- mission of a prior act of racketeering activity; (6) “unlawful debt’? means a debt (A) incurred or con- tracted in gambling activity which was in violation of the law of the United States, a State or political sub- division thereof, or which is unenforceable under State or Federal law in whole or in part as to principal or interest because of the laws relating to usury, and (B) which was incurred in connection with the business of gambling in violation of the law of the United States, 46a a State or political subdivision thereof, o [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1283%3A1. Public record. Not legal advice.