Opposition Brief — Tatum v. Columbia Natural Resources, Inc.

No. 95-880

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1995

ZACHARY TATUM, STRATA EXPLORATION, INC.,

TATUM PETROLEUM OHIO, INC. and TATUM

PETROLEUM CORPORATION

Petitioners,

Vs.

COLUMBIA NATURAL RESOURCES, INC. and

STOCKER & SITLER OIL COMPANY,

Respondents,

On Petition for Writ of Certiorari to the United States

Court of Appeals for the Sixth Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

JO ELLEN DIEHL YEARY DAVID D. NOBLE

COLUMBIA NATURAL Counsel of Record

RESOURCES, INC. JOHN E. SULLIVAN

Lawyer for Respondent NOBLE & SULLIVAN

900 Pennsylvania Avenue Lawyers for Respondents

Charleston, 1025 Huron Road

West Virginia 25362 Cleveland, Ohio 44115

(304) 353-5166 (216) 771-1212

i

QUESTIONS PRESENTED

Petitioners’ first two Questions Presented have been

reduced to one question. It has been altered to state the facts

described in the Amended Complaint.

I. Whether the "pattern of racketeering activity"

element in the Racketeer Influenced and Corrupt

Organization Act, 18 U.S.C. § 1962(c), is unconstitutionally

void for vagueness because it failed to notify Petitioners of

potential RICO liability while they were committing

hundreds of counts of mail fraud, 28 counts of wire fraud

and one instance of Travel Act fraud to perpetrate multiple

schemes over a period of twelve years.

Petitioners’ Third Question Presented is not

appropriate for their Application for Certiorari because it

was neither argued nor ruled upon in either the district or

circuit courts.

il

LIST OF PARTIES

The parties to the proceedings are:

Petitioners: Zachary Tatum, Strata

Exploration, Inc., Tatum Petroleum Ohio,

Inc. and Tatum Petroleum Corporation

Respondents: Columbia Natural Resources,

Inc. and Stocker & Sitler Oil Company

Respondents represent that Stocker & Sitler Oil

Company has no parent companies or nonwholly owned

subsidiaries to list for purposes of Supreme Court Rule 29.6.

Respondents also represent that Columbia Natural

Resources, Inc. is a wholly owned subsidiary of The

Columbia Gas System, Inc. of Wilmington, Delaware. It

has no nonwholly owned subsidiaries to list for purposes of

Supreme Court Rule 29.6.

ili

TABLE OF CONTENTS

Questions Presented ...........,000~2~C*”

cepts nly tell a

Opinions Below, Jurisdiction, And Constitutional

And Statutory Provisions as a ee

Statement Of The ee

UP OS re ce eee eee.

I. Petitioners have presented no

credible reason for this court

to grant the Wnit of Certiorari .. _ .

iv

Contents

Page

II. The "pattern of racketeering

activity" element in_ the

racketeer influenced and

corrupt organizations act, 18

U.S.C. §1962(c), meets the

due process requirement of

notice when applied to

petitioners who committed

hundreds of counts of mail

fraud, 28 counts of wire fraud

and one count of travel act

fraud over a period of at least

pS Gch ce leo eee es 18

III. The confusing third question

presented should be dismissed

because it was not raised in

either the district or circuit

courts and because it is

foreclosed by

SS ina 6 aka 60d ale oe ele 27

A. New Arguments Are Prohibited

ee sea eee ee 8s 27

B. The Apparent Argument ..... 28

os Turkette Has Settled This Issue . 29

CS C8 gb ok be doe CS ee eee 30

icoeinnemnaniemeebataieiaaanatinl

ee ee

V

Contents

Page

TABLE OF CITATIONS

Cases Cited:

Abell v. Potomac Ins. Co., 946 F.2d 1160 (Sth Cir. 1991),

cert. denied, 504 U.S. 911 (1992) .............. 8, 14

Aetna Casualty Sur. Co. v. P & B Autobody, 43 F.3d 1546

CP Fe eas ry ne ee 14

Aldridge v. Lily-Tulip, Inc., 953 F.2d 587 (11th Cir. 1992),

cert. denied, 116 S.Ct. 565 ee ne es eee 14

Allwaste, Inc. v. Hecht, 65 F.3d 1523 (9th Cir. 1995) .... 14

American Credit Indem. Co. y. Legge, 829 F. Supp. 649

aerial lt. MERE ER i Oe 9

American Eagle Credit Corp. v. Gaskins, 920 F.2d 352

escalates, MEET EOE OEP ee Lea 14

Apparel Art Int'l v. Jacobson, 967 F.2d 720

(5 CR. SO os eee 14

Arenson v. Whitehall Convalescent & Nursing Home,

880 F. Supp. 1202 (N.D. Ill. “as SG Cee Oe. 15

Atlas Pile Driving Co. v. DiCon Financial Co., 886 F.2d 986

Gere, Te kee iv eee eee 14

Banks v. Wolk, 918 F.2d 418 (3rd Cir. ie, PES pe 13

Beck v. Edward D. Jones & Co., 735 F. Supp. 903

2 I eer rar ks A ete 3 9

vi

Contents

Page

Bingham v. Zolt, 823 F. Supp. 1126 (S.D.N.Y. 1993) ..... 9

Bonton v. Archer Chrysler Plymouth, 889 F. Supp. 995

G.@. FR. TR a ae i Oe eee ees 15

Bowdoin Constr. Corp. v. Rhode Island Hosp. Trust

Nat'l Bank, 869 F. Supp. 1004 (D. Mass. 1994) ....... 15

Brook v. Schlesinger, 898 F. Supp. 1076 (S.D.N.Y.

FOGG) civ cndvcebsh te eee eee eae 15

Bseirani v. Mahshie, 881 F. Supp. 778 (N.D.N.Y.

SOUND ve cevtandeuwsaes tee eee 4

Chapman v. United States, 500 U.S. 453 (1991) ....... 25

City of Springfield, Mass. v. Kibbe, 480 U.S. 257

(TRB) 6 0 oc wee ads cs area ae eee 27

Civil Service Commission v. Letter Carriers, 413 U.S. 548

(ISTS) 0. cnccccuces eubuaesebes ete 26

Coates v. City of Cincinnati, 402 U.S. 611 (1971) ...... 25

Columbia Natural Resources, Inc. v. Tatum, 58 F.3d 1101

COG Cir. TOGGR a ce cdnvwee seule eee 13, 21

Combs v. Bakker, 886 F.2d 673 (4th Cir. 1989) ........ 14

Conley v. Gibson, 355 U.S. 41 (1957) ............ 2, 20

Corporacion Insular De Seguros v. Munoz, 826 F. Supp. 599

(DPR. WE 6 .c sas 000s sees eee 9, 15

vii

Contents

Page

Cox v. Administrator U.S. Steel & Carnegie, 17 F.3d 1386

(11th Cir. 1994), cert. denied, 115 S.Ct. 900 (1995)... 8, 14

D'Orange v. Feely, 894 F. Supp. 159 (S.D.N.Y. 1995)

TOR TS eS Oot hele ke ee aed Eee ie ee 15

Davis v. Hudgins, 896 F. Supp. 561 (E.D. Va.

DeShaney v. Winnebago County Dept. of Social Services.

snare die Bessey ou. PET ee en 27

DeWit v. Firstar Corp., 879 F. Supp. 947 (N.D. lowa

WE 2 Hine TUN CR ee ee ee 15

Diamonds Plus, Inc., v. Kolber, 960 F.2d 765

POSS TOD 9-6-6: sae EE RR det 14

E.E.0.C. v. Federal Labor Relations Authority, 476 U.S. 19

aes, MEL CO i EE BIE 27

Edmondson & Gallagher v. Alban Towers Tenants Ass'n,

GS P-O0 TSOP ODL, WDD 6 oo bio vo vile Ke weds oc. 13

Farberware, Inc. v. Groben, 764 F. Supp. 296 (S.D.N.Y.

WE. ce wae bmw tan te ee ee cee

Firestone v. Galbreath, 747 F. Supp. 1556 (S.D. Ohio 1990),

aff'd on other grounds, 976 F.2d 279 (6th Cir. 1992) .... 10

First Nat'l Bank & Trust Co. v. Hollingsworth,

931 F.2d 1295 (8th Cir. 1991)................... 14

vili

Contents

Page

Flip Mortgage Corp. v. McEthone, 841 F.2d 531 (4th Cir.

Re eer reer reer re rer eT a ee ee 10

Food Lion v. Capital Cities/ABC, 887 F. Supp. 811

Re i EE: Woda bob 0 ao ee Se Oe wh ees 15

Fried v. Sungard Recovery Services, 900 F. Supp. 758

= FE APPS ee eee ee eT Te OTT Tee e 15

Giaccio v. Pennsylvania, 382 U.S. 399 (1966) ......... 25

GICC Capital Corp. v. Technology Finance Group,

GF Fie Ge Ge Gals SUP he eh cee dd oveceseese 13

Gotham Print, Inc. v. American Speedy Print Ctrs., Inc.,

863 F. Supp. 447 (E.D. Mich. 1994) .............. 16

Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989) ... 27

Grayned v. City of Rockford, 408 U.S. 104 (1972) .... 8, 24

Gruntal & Co., Inc. v. San Diego Bancorp,

Fe Fg 8k re 15

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

492 U.S. 229 (1989) ........ 6, 10, 11, 15, 16, 18, 19, 23

H.J. Inc. v. Nortwestern Bell Tel. Co., 829 F.2d 648

(8th Cir. 1987), cert. granted, 485 U.S. 958 (1988) ..... 10

Haroco, Inc. v. American Nat’l Bank & Trust Co., 747 F.2d

384 (7th Cir. 1985), aff'd, 473 U.S. 606 (1985)..... 18, 28

Harris Custom Builders Inc. v. Hoffmeyer, 834 F. Supp. 256

8 ee ere rrerrs Cor rere ry ee ce 16

ix

Contents

Page

Hartz v. Friedman, 919 F.2d 469 (7th Cir. eee 13

Hindes v. Castle, 937 F.2d 868 (3rd Cir. 1991) ........ 13

Hoffman Estates v. Flipside, Hoffman Estates, Inc..

ee RUD oo: Shas 3% be wren Coy o'ele ee ae 8, 24

In re Crazy Eddie Sec. Litig., 747 F. Supp. 850

Ae re 9

In re Integrated Resources Real Estate Ltd. Partnerships

Sec. Litig., 850 F. Supp. 1105 (S.D.N.Y. are 9

J.D. Marshall Int’l., Inc. v. Redstart, Inc., 935 F.2d 815

re ee ee 13

Jacobson v. Cooper, 882 F.2d 717 (2nd Cir. 1989)...... 14

Kehr Packages v. Fidelcor, Inc., 926 F.2d 1406 (3rd Cir.

1991), cert. denied, 501 U.S. 1222 (1991) ........... 13

Kenty v. Bank One, Columbus, N.A., 1992 U.S. Dist.

LEXIS 16645 (S.D. Ohio 1992).................. 10

Lange v. Hocker, 940 F.2d 359 (8th Cir. 1991) ........ 14

Lavian v. Haghnazari, 884 F. Supp. 670 (E.D.N.Y.

ace eaare eos eee a read Oe os 15

Lemelson v. Wang Lab., 874 F. Supp. 430 (D. Mass.

rae hs Beets oie 15

Lui Ciro, Inc. v. Ciro, Inc., 895 F. Supp. 1365

EEE d's a cleus ee ak aie eee 15

x

Contents

Page

Lytle v. Household Mfg., Inc., 494 U.S. 545 (1990) ..... 27

Marshall-Silver Constr. Co. v. Mendel, 894 F.2d 593

Ss sc deo a6 os os dae U bee wears as 14

Mathon v. Marine Midland Bank, N.A., 875 F. Supp. 986

SM Te cneeeae sa vusnee wee eeeerhee se 15

Medical Soc. of N.Y. v. Cuomo, 777 F. Supp. 1157

(S.D. N.Y. 1991), aff'd, 976 F.2d 812 (2nd Cir. 1992)

Perr ST er Te eee ee ee PEP eer Tee 25

Naan Vv. U.5., £69 UB. SIS (IDES) oc ccc ccc ccc reves 26

New York v. Ferber, 458 U.S. 747 (1982) ............ 19

Norstar Bank v. Pepitone, 742 F. Supp. 1209

88 8 Re ee ere eee ee ee eee 9

NOW v. Scheidler, 897 F. Supp. 1047 (N.D. Ill. 1995) ....9

Olive Can Co., Inc. v. Martin, 906 F.2d 1147

1, Lt MS Pee eae ee 13

Parcoil Corp. v. Nowsco Well Service, Lid. , 887 F.2d 502

Ge: SE” oo oon bab Viele wale ORR SS eS wees 13

Parker v. Levy, 417 U.S. 733 (1974)... 2... 2 ee ees 26

Patrick Carter Assoc., Inc. v. Rent Stabilization Ass'n,

Fe @ 7 Ft hk Se Re errr es ee )

Pemberton Sales & Services v. Banco Popular de P. R.,

O77 F.. Sapp. SSl GD. VE. TSP ccccccccvccsccvess 15

————

xi

Contents

Page

Phelps v. Wichita Eagle-Beacon, 886 F.2d 1262 (10th Cir.

ME ot ean ube Rae a Gaye cg OTe 14

Primary Care Inv., Seven v. PHP Healthcare, 986 F.2d 1208

UI ed hone Sys Vnbn ce bok eecc. 6c. 14

Pyramid Secur. Lid. v. IB Resolution, Inc., 924 F.2d 1114

(D.D.C. 1991), cert. denied, 502 U.S. 822 .. Soe 14

R.A.G.S. Couture, Inc. y. Hyatt, 774 F.2d 1350

SUPE 0x Fue su Vouuea encore 29

Religious Technology Center vy. Wollersheim, 971 F.2d 364

(9th Cir. 1992), cert. denied, 479 U.S. 1103 ae Ait weak 14

Resolution Trust Corp. v. Stone, 998 F.2d 1534 (10th Cir.

meee LT eT re rene 13

Rini v. Zwirn, 886 F. Supp. 270 (E.D.N.Y. 1995) ...... 15

River City Markets, Inc. vy. Fleming Foods West, Inc..

960 F.2d 1458 (9th Cir. 1992), cert. denied, 113 §.Ct. 99

Ae wt Ss Wah Bw oop o 6 oo Sd veces 14

Roberts v. U.S., 226 F.2d 464 (6th Cir. 1955),

cert. denied, 350 U.S. 935 RPGS Ore Ae A ee 21

Rohland v. Syn-Fuel Associates--1982 Lid Partnership,

879 F. Supp. 322 (S.D.N.Y. 1995)................ 15

Rose v. Locke, 423 U.S. 48 ee ae | 26

xii

Contents

Page

Schroeder v. Acceleration Life Ins. Co., 972 F.2d 41

og A. re ere rr rea gr” 14

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

SR ir ied woe oa 8 oo eee oa ee ee 11, 12, 18, 19, 23

Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162 (3rd Cir.

SUE <5 6's ee ees ocak one aba eeaean wane 13

Shuttlesworth v. Housing Opportunities Made Equal,

873 F. Supp. 1069 (S.D. Ohio 1994)............... 15

Smith v. Goguen, 415 U.S. 566 (1974) .............. 8

Sutherland v. O'Malley, 882 F.2d 1196 (7th Cir. 1989)

rere ere oer er eR ee PTE ROR IE Pree ko 13

Tel-Phonic Services, Inc. v. TBS Int'l, Inc., 975 F.2d 1134

as SUE Spee os eke 4 eeee se eee 14

Thai Airways Int’l v. United Aviation Leasing B.V.,

891 F. Supp. 113 (S.D.N.Y. 1994), aff'd, 59 F.3d 20

CE ob ete keep n de boas 00> Eee eee 15

Thompson v. Paasche, 950 F.2d 306 (6th Cir. 1991) ..... 14

Thornton v. First State Bank, 4 F.3d 650 (8th Cir. 1993)

eee SECS Pe CP Tee Ce ee er ee 14

Ticor Title Ins. Co. v. Florida, 937 F.2d 447 (9th Cir.

GED ais db ee ce heees 665 0k be Oe eee 14

Trans World Airline, Inc. v. Berger, 864 F. Supp. 106

PE GS SOD 6-8 05 bed eee eee 15

xiii

Contents

Page

Tribune Co. v. Purcigliotti, 869 F. Supp. 1076 (S.D.N.Y.

WO See e eee icc cscs ccces. ee 15

Trustee of Plumbers & Pipefitters Nat'l Pension Fund v.

Transworld Mechanical, 886 F. Supp. 1134

A ee 15

Trustees of the Plumber & Pipefitter Nat'l Pension Fund y.

De-Con Mechanical Contractors, 896 F. Supp. 342

I ee 15

U.S. v. Andrews, 749 F. Supp. 1520 (N.D. Ill. 1990) .... . 9

U.S. v. Angiulo, 897 F.2d 1169 (ist Cir. 1990),

cert. denied, 498 U.S. 845 (1990) ................. vy)

U.S. v. Ashman, 979 F.2d 469 (7th Cir. 1992) ......... 8

U.S. v. Bennett, 984 F.2d 597 (4th Cir. 1993),

cert. denied, 113 S.Ct. 2428 (1993) ................

U.S. v. Bohonus, 628 F.2d 1167 (9th Cir. 1980),

cert. denied, 447 U.S.928 (1980) ............. a

U.S. v. Busacca, 739 F. Supp. 370 (N.D. Ohio 1990),

aff'd, 936 F.2d 232 (6th Cir. 1991),

cert. denied, 502 U.S.985 (1991) ................. 9

U.S. v. Bustamante, 45 F.3d 933 (Sth Cir. 1995),

cert. denied, 116 §.Ct. 473 (1995) ................ 14

U.S. v. Church, 955 F.2d 688 (11th Cir. 1992),

cert. denied, 113 §.Ct. 233 (1992) ................ 14

xiv

Contents

U.S. v. Coiro, 922 F.2d 1008 (2nd Cir. 1991),

cert. denied, 501 U.S. 1217 (1991) ............

U.S. v. Conner, 752 F.2d 566 (11th Cir. 1985),

cert. denied, 474 U.S. 821 (1985) ............

U.S. v. Crosby, 789 F. Supp. 440 (D.D.C. 1992),

aff'd, 20 F.3d 480, cert. denied, 115 S.Ct. 221 (1994)

U.S. v. Dempsey, 768 F. Supp. 1256 (N.D. Ill. 1990)

U.S. v. Dischner, 974 F.2d 1502 (9th Cir. 1992),

cert. denied, 113 §.Ct. 1290 (1993) ...........

U.S. v. Eisenberg, 773 F. Supp. 662 (D.N.J. 1991) .

U.S. v. Feinberg, 535 F.2d 1004 (7th Cir. 1976),

cert. denied, 429 U.S. 929 (1976) ............

U.S. v. Field, 432 F. Supp. 55 (S.D.N.Y. 1977),

aff'd, 578 F.2d 1371 (2nd Cir. 1978) ..........

U.S. v. Gatto, 746 F. Supp. 432 (D.N.J. 1990) ....

U.S. v. Gigante, 737 F. Supp. 292 (D.N.J. 1990) ..

U.S. v. Khan, 53 F.3d 507 (2nd Cir. 1995),

cert. denied, 1196 U.S. LEXIS 18 (1996)........

U.S. v. Korando, 29 F.3d 1114 (7th Cir. 1994),

cert. denied, 115 S.Ct. 496 (1994) ............

U.S. v. Krout, 66 F.3d 1420 (Sth Cir. 1995) ......

U.S. v. Lobue, 751 F. Supp. 748 (N.D. Ill. 1990) ..

XV

Contents

Page

U.S. v. Louderman, 576 F.2d 1383 (9th Cir. 1978),

cert. denied, 439 U.S. 896 (1978) ................ 21

U.S. v. Masters, 924 F.2d 1362 (7th Cir. 1991),

cert. denied, 500 U.S.919 (1991) ................. 7)

U.S. v. Oreto, 37 F.3d 739 (ist Cir. 1994),

cert. denied, 115 S.Ct. 1161 (1995) ................ 8

U.S. v. Paccione, 738 F. Supp. 691 (S.D.N.Y. 1990) ..... 9

U.S. v. Parness, 503 F.2d 430 (2nd Cir. 1974),

cert. denied, 419 U.S. 1105 (1975) ................. 9

U.S. v. Pelullo, 964 F.2d 193 (3rd Cir. SN a ee dae 14

U.S. v. Pungitore, 910 F.2d 1084 (3rd Cir. 1990),

cert. denied, 500 U.S.915 (1991) .............. 9, 19

U.S. v. Quintanilla, 760 F. Supp. 687 (N.D. Ill. 1991),

aff'd, 2 F.3d 1469 (7th Cir. 1993) ................. )

U.S. v. Riggs, 743 F. Supp. 556 (N.D. Ill. Seer 21

U.S. v. Ruiz, 905 F.2d 499 (ist Cir. 1990) ........... 14

U.S. v. Sanders, 962 F.2d 660 (7th Cir. 1992),

cert. denied, 113 S.Ct. 262 (1992) ................. 8

U.S. v. Stofsky, 409 F. Supp. 609 (S.D.N.Y. 1973),

cert. denied, 429 U.S. 819 (1976) ................ 10

U.S. v. Swiderski, 593 F.2d 1246 (D.C. Cir. 1978),

cert. denied, 441 U.S. 993 (1979) ................. 7)

xvi

Contents

Page

U.S. v. Thevis, 474 F. Supp. 134 (N.D. Ga. 1979),

aff'd, 665 F.2d 616 (Sth Cir. 1982),

cert. denied, 459 U.S. 825 (1982) ..........5 005 eee 9

U.S. v. Tripp, 782 F.2d 38 (6th Cir. 1986),

cort. dented, 4735 U3. TiS (ieee 0 0k hc eeereeea ee v)

U.S. v. Turkette, 452 U.S. 576 (1981) .......-6-. 19, 29

U.S. v. Van Dorn, 925 F.2d 1331 (11th Cir. 1991) ....... 8

U.S. v. Wei, 862 F. Supp. 1129 (S.D.N.Y. 1994) ....... 9

U.S. v. Woods, 915 F.2d 854 (3rd Cir. 1990),

cert. denied, 499 U.S. 947 (1991) .. 0... eee ee ee es 9

Uniroyal Goodrich Tire Co. v. Mutual Trading Corp..,

149 F. Supp. 869 (N.D. Hl. 1DBG) nc ccc eee cenes )

Vild v. Visconsi, 956 F.2d 560 (6th Cir. 1992)......... 14

Water Int'l Network, Inc. v. East, 892 F. Supp. 1477

(M.D. Pee. 1956) oc ccc eee eee eae ee 15

Waters-Pierce Oil Co. v. Texas, 212 U.S. 86 (1909) ...... 8

Wobble Light v. McLain/Smigiel Partnership,

890 F. Supp. 721 (N.D. Ill. 1995) ..........00005 15

xvii

Contents

Page

Statutes Cited:

ee 22

CN 29

er i,, 2, 18, 28

United States Constitution Cited:

ome Ge, PM. Vw ccc ccc ee. 18

| a 18

Rules Cited:

A a 2, 20

Supreme Court Rule 29.6 ....................... ii

xvili

Contents

Page

Other Authority Cited:

Bauerschmidt, “Mother of Mercy - Is This The End of RICO?" -

Justice Scalia Invites Constitutional Void-for Vagueness

Challenge to RICO "Pattern", 65 Notre Dame Law Review

eee ey ee ere ee ee are 17

David W. Gartenstein and Joseph F. Warganz,

RICO’s "Pattern" Requirement: Void for Vagueness?,

90 Columbia Law Review 489 (1990) .............. 12

Getzendanner, Judicial "Pruning" of "Garden Variety Fraud"

Civil RICO Cases Does Not Work: It’s Time for Congress to

het, TS Va: Sas TE. Ge I. 0 6 0b 6 Sas Ces es 16

l

No. 95-880

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1995

ZACHARY TATUM, STRATA EXPLORATION, INC.,

TATUM PETROLEUM OHIO, INC. and TATUM

PETROLEUM CORPORATION

Petitioners,

vs .

COLUMBIA NATURAL RESOURCES, INC. and

STOCKER & SITLER OIL COMPANY,

Respondents,

On Petition for Writ of Certiorari to the United States

Court of Appeals for the Sixth Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

TO THE HONORABLE SUPREME COURT:

Respondents, Columbia Natural Resources, Inc. and

Stocker & Sitler Oil Company, respectfully request

that the Court deny the Petition for a Writ of

Certiorari submitted by Petitioners.

2

OPINIONS BELOW, JURISDICTION, AND

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Respondents accept Petitioners’ Opinions Below,

Statement of Jurisdiction, and Constitutional and Statutory

Provisions Involved.

STATEMENT OF THE CASE

A. Procedural History

Petitioners’ statement of the procedural history is

substantially accurate with one exception. The Amended

Complaint does allege that Petitioners conspired to violate 18

U.S.C. § 1962(c). (Amended Complaint, p. 74 4 361.)

B. Course of Proceedings

Petitioners’ statement of the course of the proceedings

is accurate. It truthfully portrays that the issue in

Petitioners’ Third Question Presented was not raised or

considered in the lower courts. It is new to this appeal.

C. Statement of Facts

For purposes of the Rule 12(b)(6) Motion to Dismiss

granted by the trial court, the allegations of the Amended

Complaint must be taken as true. Conley v. Gibson, 355

U.S. 41 (1957). Therefore, the facts in this case are those

set forth in the Amended Complaint.

3

As described in the Amended Complaint, Petitioners

formed an association in fact enterprise which engaged in a

pattern of racketeering activity by committing hundreds of

related predicate acts continuously from 1981 to June 30.

1993, when the Amended Complaint was filed. The

predicate acts consist of hundreds of instances of mail fraud.

28 instances of wire fraud and one instance of Travel Act

Fraud. All are related to the theft of the Respondents’ oil

and gas leases, royalties and production income through

various schemes. The Petitioners continue to receive oil

and gas royalty and production income which should belong

to the Respondents. This will persist through the productive

lives of the oil and gas wells on the leases Petitioners stole

through fraud and deception.

A series of Farmout Agreements gave Petitioners the

Opportunity to drill shallow oil and gas wells and earn

shallow lease rights on 47 oil and gas leases belonging to the

Respondents’ predecessor. The lease rights to deeper

horizons remained with Respondents’ predecessor. These

Farmout Agreements included an express promise that any

new leases extending, renewing or replacing the original

leases would belong to Respondents’ predecessor and its

successors. The Petitioners embarked on a furtive and

intricate scheme to escape the fiduciary duties imposed by

this clause in order to steal ten million dollars

($10,000,000.00) worth of oil and gas lease rights, royalties

and production income belonging to Respondents.

On ten of the 47 oil and gas leases, the Petitioners

obtained new oil and gas leases from the landowners that

became effective if Petitioners failed to drill before

4

Respondents’ oil and gas leases expired.’ Of course,

Petitioners validated their “top leases" by refraining from

drilling until Respondents’ leases expired. On four of these

"top leases," Petitioners then drilled shallow wells. Instead

of honoring the renewal, replacement and extension clause

in the Farmout Agreements, Petitioners defrauded

Respondents of both the royalties for the shallow wells and

the right to drill deep wells.

When oil and gas exploration developments in the late

1980s made the deep drilling rights on these "top leases"

valuable, the Petitioners drilled deep wells and thereby

defrauded Respondents of substantial oil and gas production

income.

In addition, when deep drilling became profitable,

Petitioners took “top leases" on leases held by production

from shallow wells Petitioners had drilled pursuant to the

Farmout Agreements. Respondents’ predecessor had

retained the deep rights on these leases and later transferred

them to Respondents. Once Petitioners had these "top

leases," they plugged and abandoned their shallow wells that

maintained the validity of these leases. This simple

' Oil and gas leases generally, and these leases in particular,

have a primary term for a set period, and a secondary term that lasts so

long as oil and gas is produced. Therefore, a failure to drill within the

primary term causes an oil and gas lease to expire. In this case, the

primary term for most of the leases was 10 years, not the 20 years stated

in Petitioners’ Brief.

A new lease on real property already encumbered with a lease

is called a “top lease.” The “renewal, replacement and extension” clause

in the Farmout Agreements is designed to prevent a farmee from using

a “top lease” to “wash out” the interest of the farmor.

5

expedient caused Respondents’ lease rights to expire. Then

Petitioners used their "top leases" to drill new deep wells

without honoring their renewal, replacement and extension

Clause obligations. The result was theft of valuable oil and

gas production.

In order to perpetrate this thievery and delay its

detection, Petitioners made false and misleading statements

through interstate mails, wires and travel. Exhibits 24 to 30

to the Amended Complaint detail hundreds of mailings, 28

telephone calls and one act of interstate travel to promote

Petitioners’ fraudulent schemes.”

Now the Petitioners claim their theft of ten million

dollars ($10,000,000.00) was just "ordinary business" so

they could not know they might run afoul of the RICO law.

* Amended Complaint, pp. 65-69, 44 332 to 344.

6

REASONS FOR DENIAL OF THE WRIT

SUMMARY OF ARGUMENT

There is no need to grant the Writ. Ten circuits

agree; the "RICO pattern requirement” amply warns the

wary. It consistently passes due process muster. No circuit

believes it to be void for vagueness.

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

492 U.S. 229, 256 (1989), the lower courts have applied the

"RICO pattern requirement” to hundreds of factual

configurations. In most cases, whether a “pattern” exists is

not a difficult question. When different considerations point

to conflicting conclusions regarding the existence of a

“pattern,” the lower courts balance the elements to reach

consistent results. This is called the "multifactor" approach.

The wary can avoid RICO liability. Before the

“pattern requirement” is satisfied, three thresholds must be

crossed. First is one racketeering crime. Second is a

second racketeering crime within ten years. Third is enough

related and continuous crimes to be a “pattern of

racketeering activity.” Petitioners only challenge the clarity

of the third threshold.

Petitioners do not claim the mail, wire and Travel

Act fraud statutes are vague. Therefore, the first two

thresholds are “bright line" warnings to the wary. When

Petitioners committed their first racketeering crime, they

knew this was the realm of the criminal. When they

7

committed their second racketeering crime within ten years,

they knew this was the realm of potential RICO liability.

Petitioners should have known they were engaged in

criminal activity every time they used the mails, the wires or

the instrumentalities of interstate commerce to further their

scheme to steal Respondents’ property. When they

committed hundreds of such violations during more than

twelve years, they should have had little doubt they were

establishing a pattern of racketeering activity in violation of

RICO. Petitioners’ only complaint is that they do not know

precisely when their criminality crossed the third threshold

and became a “pattern.”

The “pattern requirement" provides a standard with

at least as much clarity as many other tests this Court has

approved like "restraint of trade,” "an active part in

management of political campaigns," “conduct unbecoming

an officer and a gentleman,” and "crimes against nature."*

Petitioners’ third argument is new to this appeal. It

was not argued or ruled upon in either the district or circuit

courts. This alone suffices to deny review.

Further, Petitioners’ third argument, although

unclear, seems to be one that ignores logic and precedent.

Even if adequately preserved below, it is not appropriate for

review.

* See footnotes 29 to 32, infra p. 26.

8

ARGUMENT AND AUTHORITIES

FOR DENIAL OF THE WRIT

PETITIONERS HAVE PRESENTED NO

CREDIBLE REASON FOR THIS COURT TO GRANT

THE WRIT OF CERTIORARI

Petitioners have established no basis for review by

this Court. There is an adequate body of law on the due

process requirement of clarity in the law.‘

There is no conflict in the circuits. Ten circuits have

considered whether the RICO “pattern” requirement is

vague. All ten have found it to be understandable and in

compliance with due process requirements.* Likewise, all

* See, e.g., Hoffman Estates v. Flipside, Hoffman Estates, Inc.,

455 U.S. 489 (1982); Smith v. Goguen, 415 U.S. 566 (1974); Grayned

v. City of Rockford, 408 U.S. 104 (1972); and Waters-Pierce Oil Co. v.

Texas, 212 U.S. 86 (1909).

° U.S. v. Krout, 66 F.3d 1420 (Sth Cir. 1995); U.S. v. Oreto,

37 F.3d 739 (1st Cir. 1994), cert. denied, 115 S.Ct. 1161 (1995); U.S.

v. Korando, 29 F.3d 1114 (7th Cir. 1994), cert. denied, 115 S.Ct. 496

(1994); Cox v. Administrator U.S. Steel & Carnegie, 17 F.3d 1386 (11th

Cir. 1994), cert. denied, 115 S.Ct. 900 (1995); U.S. v. Bennett, 984

F.2d 597, 606 (4th Cir. 1993), cert. denied, 113 S.Ct. 2428 (1993); U.S.

v. Ashman, 979 F.2d 469 (7th Cir. 1992); U.S. v. Dischner, 974 F.2d

1502 (9th Cir. 1992), cert. denied, 113 S.Ct. 1290 (1993); U.S. v.

Sanders, 962 F.2d 660 (7th Cir. 1992), cert. denied, 113 S.Ct. 262

(1992); Abell v. Potomac Ins. Co., 946 F.2d 1160 (Sth Cir. 1991), cert.

denied, 504 U.S. 911 (1992); U.S. v. Van Dorn, 925 F.2d 1331, 1334

9

the district courts to consider the intelligibility of the RICO

“pattern” requirement have found it to be constitutional ,°

n.2 (11th Cir. 1991); U.S. v. Masters, 924 F.2d 1362, 1367 (7th Cir.

1991), cert. denied, 500 U.S. 919 (1991); U.S. v. Coiro, 922 F.2d 1008

(2nd Cir. 1991), cert. denied, 501 U.S. 1217 (1991); U.S. v. Woods,

915 F.2d 854 (3rd Cir. 1990), cert. denied, 499 U.S. 947 (1991); U.S.

v. Pungitore, 910 F.2d 1084 (3rd Cir. 1990), cert. denied, 500 U.S. 915

(1991); U.S. v. Angiulo, 897 F.2d 1169 (ist Cir. 1990), cert. denied,

498 U.S. 845 (1990); U.S. v. Tripp, 782 F.2d 38 (6th Cir. 1986), cert.

denied, 475 U.S. 1128 (1986); U.S. v. Swiderski, 593 F.2d 1246 (D.C.

Cir. 1978), cert. denied, 441 U.S. 993 (1979); U.S. v. Parness, 503

F.2d 430 (2nd Cir. 1974), cert. denied, 419 U.S. 1105 (1975).

6 NOW vy. Scheidler, 897 F. Supp. 1047 (N.D. Ill. 1995);

Bseirani v. Mahshie, 881 F. Supp. 778 (N.D.N.Y. 1995); U.S. v. Wei,

862 F. Supp. 1129 (S.D.N.Y. 1994); In re Integrated Resources Real

Estate Lid. Partnerships Sec. Litig., 850 F. Supp. 1105 (S.D.N.Y.

1993); American Credit Indem. Co. v. Legge, 829 F. Supp. 649

(S.D.N.Y. 1993); Corporacion Insular De Seguros v. Munoz, 826 F.

Supp. 599 (D.P.R. 1993); Bingham v. Zolt, 823 F. Supp. 1126

(S.D.N.Y. 1993); U.S. v. Crosby, 789 F. Supp. 440 (D.D.C. 1992),

aff'd, 20 F.3d 480, cert. denied, 115 S.Ct. 221 (1994); Schrag v.

Dinges, 788 F. Supp. 1543 (D. Kan. 1992); Patrick Carter Assoc., Inc.

v. Rent Stabilization Ass'n, 781 F. Supp. 207 (S.D.N.Y. 1991); U.S. v.

Eisenberg, 773 F. Supp. 662 (D.N.J. 1991); U.S. v. Dempsey, 768 F.

Supp. 1256 (N.D. Ill. 1990); Farberware, Inc. v. Groben, 764 F. Supp.

296 (S.D.N.Y. 1991); U.S. v. Quintanilla, 760 F. Supp. 687 (N.D. Ill.

1991), aff'd, 2 F.3d 1469 (7th Cir. 1993), U.S. v. Lobue, 751 F. Supp.

748 (N.D. Ill. 1990); U.S. v. Andrews, 749 F. Supp. 1520 (N.D. Ill.

1990); Uniroyal Goodrich Tire Co. v. Mutual Trading Corp., 749 F.

Supp. 869 (N.D. Ill. 1990); In re Crazy Eddie Sec. Litig., 747 F. Supp.

850 (E.D.N.Y. 1990); U.S. v. Gatto, 746 F. Supp. 432 (D.N.J. 1990);

Norstar Bank v. Pepitone, 742 F. Supp. 1209 (E.D.N.Y. 1990); U.S. v.

Busacca, 739 F. Supp. 370 (N.D. Ohio 1990), aff'd, 936 F.2d 232 (6th

Cir. 1991), cert. denied, 502 U.S. 985 (1991); U.S. v. Paccione, 738 F.

Supp. 691 (S.D.N.Y. 1990); U.S. v. Gigante, 737 F. Supp. 292 (D.N.J.

1990); Beck v. Edward D. Jones & Co., 735 F. Supp. 903 (C.D. Ill

1990); U.S. v. Thevis, 474 F. Supp. 134 (N.D. Ga. 1979), aff'd, 665

10

save in this case and two other cases in the Southern District

of Ohio.’

There was a conflict in the circuits regarding the

proper interpretation of the RICO "pattern" requirement

when this Court last considered RICO in A.J. Inc. v.

Northwestern Bell Telephone Co., 492 U.S. 229 (1989).

Some circuits, like the eighth circuit’s H.J. decision,*

believed there was a need for at least two different schemes

to meet the pattern requirement.’ Other circuits adopted a

"multifactor" approach. This Court rejected the two

schemes requirement. It interpreted "pattern" to require

predicate acts which are: 1) related to each other; and 2)

continue or threaten to continue for a significant period of

time.

This Court, however, did not seek to define a RICO

pattern with mathematical certainty. Instead, it chose to

await further developments in the lower courts. Justice

Brennan wrote:

F.2d 616 (Sth Cir. 1982), cert. denied, 459 U.S. 825 (1982); U.S. v.

Field, 432 F. Supp. 55 (S.D.N.Y. 1977), aff'd, 578 F.2d 1371 (2nd Cir.

1978); and U.S. v. Stofsky, 409 F. Supp. 609 (S.D.N.Y. 1973), cert.

denied, 429 U.S. 819 (1976).

’ Firestone v. Galbreath, 747 F. Supp. 1556 (S.D. Ohio 1990),

aff'd on other grounds, 976 F.2d 279 (6th Cir. 1992) and Kenty v. Bank

One, Columbus, N.A., 1992 U.S. Dist. LEXIS 16645 (S.D. Ohio 1992).

8 H.J. Inc. v. Nortwestern Bell Tel. Co. , 829 F.2d 648 (8th Cir.

1987), cert. granted, 485 U.S. 958 (1988).

® See also, Flip Mortgage Corp. v. McElhone, 841 F.2d 531 (4th

Cir. 1988).

1]

The limits of the relationship and

continuity concepts that combine to define a

RICO pattern, and the precise methods by

which relatedness and continuity or its threat

may be proved, cannot be fixed in advance

with such clarity that it will always be

apparent whether in a particular case a

“pattern of racketeering activity” exists. The

development of these concepts must await

future cases, absent a decision by congress to

revisit RICO to provide clearer guidance as to

the Act’s intended scope.

Id., 492 U.S. at 243.

This approach has proved to be wise. The lower

courts have used the guidance provided by H.J. Inc. to focus

on a "multifactor" approach to determine whether a RICO

pattern exists. This change was summarized by an article in

the Columbia Law Review:

In the wake of Sedima, the federal

courts set out to develop "a meaningful

concept" of pattern with little guidance from

the Court beyond the terms "continuity" and

“relationship.” Some courts read too much or

too little into the terms. But, since the

Court’s more explicit guidance in H.J. Inc.,

developments in pattern jurisprudence in the

various circuits are converging. Courts are

breaking down the two-pronged analysis -

"continuity plus relationship” - into a flexible,

12

more finely tuned "multifactor" approach in

which no single factor is always dispositive

whenever a defendant challenges the

sufficiency of an alleged RICO pattern.'°

The "multifactor" approach the lower courts are using

to determine whether a RICO pattern exists was well stated

by the court below in this case. The Sixth Circuit Court of

Appeals wrote:

Therefore, to state the inquiry simply,

a pattern is the sum of various factors

including: the length of time the racketeering

activity existed; the number of different

schemes (the more the better); the number of

predicate acts within each scheme (the more

the better); the variety of species of predicate

acts (the more the better); the distinct types of

injury (the more the better); the number of

victims (the more the better); and the number

of perpetrators (the less the better).

Therefore, at one extreme is a perpetrator

committing two predicate acts, in one day, in

one scheme, causing a single injury, to a

single victim. This is not a pattern. See

Sedima, 473 U.S. at 496 n.14. At the other

extreme, a perpetrator engineering dozens of

schemes, and using myriad predicate acts to

'° David W. Gartenstein and Joseph F. Warganz, R/ICO’s

"Pattern" Requirement: Void for Vagueness?, 90 Columbia Law Review

489, 497 (1990).

13

further each scheme, against numerous

victims causing numerous types of injuries,

beyond peradventure engages in a pattern of

racketeering activity.

Columbia Natural Resources, Inc. v. Tatum, 58 F.3d 1101,

1110 (6th Cir. 1995)."'

Other circuits have articulated and applied this same

"multifactor" approach in similar language.'? When the

predicate crimes are related and continuous, the circuits are

able to find a “pattern” by applying this “multifactor”

'' The Court of Appeals went on to detail the facts of this case

relevant to the “pattern” determination. It concluded, “The only factor

militating against a finding of a pattern is the fact that the number of

victims is limited. But there is no per se rule that a weakness in one area

is dispositive. Here the limited number of victims is more than balanced

by the strength presented in other areas.” 58 F.3d at 1111.

'2 See, e.g., GICC Capital Corp. v. Technology Finance Group,

67 F.3d 463, 467 (2nd Cir. 1995)(regarding continuity); Edmondson &

Gallagher v. Alban Towers Tenants Ass'n, 48 F.3d 1260, 1264-65

(D.D.C. 1995); Resolution Trust Corp. v. Stone, 998 F.2d 1534, 1543-44

(10th Cir. 1993)(regarding continuity); Hindes v. Castle, 937 F.2d 868,

873 (3rd Cir. 1991); J.D. Marshall Int’l., Inc. v. Redstart, Inc., 935

F.2d 815, 820 (7th Cir. 1991); Kehr Packages v. Fidelcor, Inc., 926

F.2d 1406, 1411-13 (3rd Cir. 1991), cert. denied, 501 U.S. 1222 (1991);

Hartz v. Friedman, 919 F.2d 469, 472 (7th Cir. 1990); Banks v. Wolk,

918 F.2d 418, 423 (3rd Cir. 1990); Olive Can Co.. Inc. v. Martin, 906

F.2d 1147, 1151 (7th Cir. 1990)("multifactor test for continuity");

Parcoil Corp. v. Nowsco Well Service, Lid., 887 F.2d 502, 504 (4th Cir.

1989); Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162, 1166 (3rd

Cir. 1989); and Sutherland v. O'Malley, 882 F.2d 1196, 1204-05 (7th

Cir. 1989).

14

approach.’* Similarly, when the crimes are not related or

the time period is very short, the circuits find no “pattern."'*

'? See, e.g., Allwaste, Inc. v. Hecht, 65 F.3d 1523 (9th Cir.

1995); U.S. v. Khan, 53 F.3d 507 (2nd Cir. 1995), cert. denied, 1196

U.S. LEXIS 18 (1996); U.S. v. Bustamante, 45 F.3d 933, 941 (Sth Cir.

1995), cert. denied, 116 S.Ct. 473 (1995); Aetna Casualty Sur. Co. v.

P & B Autobody, 43 F.3d 1546 (ist Cir. 1994); Cox v. Administrator

U.S. Steel & Carnegie, 17 F.3d 1386 (11th Cir. 1994); Schroeder v.

Acceleration Life Ins. Co., 972 F.2d 41 (3rd Cir. 1992); U.S. v. Pelullo,

964 F.2d 193, 209-210 (3rd Cir. 1992)(collecting cases); Diamonds Plus,

Inc., v. Kolber, 960 F.2d 765, 769 (8th Cir. 1992); U.S. v. Church, 955

F.2d 688 (11th Cir. 1992), cert. denied, 113 S.Ct. 233 (1992); Abell v.

Potomac Ins. Co., 946 F.2d 1160 (5th Cir. 1991), cert. denied, 504 U.S.

911 (1992); Ticor Title Ins. Co. v. Florida, 937 F.2d 447 (9th Cir.

1991)(3 forgeries over 13 months plus threat of continued misconduct);

First Nat'l Bank & Trust Co. v. Hollingsworth, 931 F.2d 1295, 1304 (8th

Cir. 1991); U.S. v. Ruiz, 905 F.2d 499 (ist Cir. 1990); Fleet Credit

Corp. v. Sion, 893 F.2d 441 (ist Cir. 1990); Combs v. Bakker, 886 F.2d

673 (4th Cir. 1989); Atlas Pile Driving Co. v. DiCon Financial Co. , 886

F.2d 986 (8th Cir. 1989); and Jacobson v. Cooper, 882 F.2d 717 (2nd

Cir. 1989).

'* Thornton v. First State Bank, 4 F.3d 650 (8th Cir. 1993);

Primary Care Inv., Seven v. PHP Healthcare, 986 F.2d 1208 (8th Cir.

1993); Tel-Phonic Services, Inc. v. TBS Int'l, Inc., 975 F.2d 1134 (Sth

Cir. 1992); Religious Technology Center v. Wollersheim, 971 F.2d 364

(9th Cir. 1992), cert. denied, 479 U.S. 1103 (1987); Apparel Art Int'l v.

Jacobson, 967 F.2d 720 (ist Cir. 1992); River City Markets, Inc. v.

Fleming Foods West, Inc., 960 F.2d 1458 (9th Cir. 1992), cert. denied,

113 S.Ct. 99 (1992); Vild v. Visconsi, 956 F.2d 560 (6th Cir. 1992);

Aldridge v. Lily-Tulip, Inc. , 953 F.2d 587 (11th Cir. 1992), cert. denied,

116 S.Ct. 565 (1995); Thompson v. Paasche, 950 F.2d 306 (6th Cir.

1991); Lange v. Hocker, 940 F.2d 359 (8th Cir. 1991); Pyramid Secur.

Lid. v. IB Resolution, Inc., 924 F.2d 1114 (D.D.C. 1991), cert. denied,

502 U.S. 822 (1991); American Eagle Credit Corp. v. Gaskins, 920 F.2d

352 (6th Cir. 1990); Marshall-Silver Constr. Co. v. Mendel, 894 F.2d

593 (3rd Cir. 1990); and Phelps v. Wichita Eagle-Beacon, 886 F.2d 1262

(10th Cir. 1989).

pews ibaa _

15

Since H.J. Inc., the district courts have been able to

determine whether particular facts constitute a "pattern" in

literally hundreds of reported cases."

As H.J. points out, shortness of time is of a factor in connection

with “closed-ended” continuity, but is not a factor in cases involving

“open-ended” continuity.

'S Recent district court cases finding a “pattern” include: Fried

v. Sungard Recovery Services, 900 F. Supp. 758 (E.D. Pa. 1995); Brook

v. Schlesinger, 898 F. Supp. 1076 (S.D.N.Y. 1995); Lui Ciro, Inc. v.

Ciro, Inc., 895 F. Supp. 1365 (D. Haw. 1995); D’Orange v. Feely, 894

F. Supp. 159 (S.D.N.Y. 1995); Water Int'l Network, Inc. v. East, 892

F. Supp. 1477 (M.D. Fla. 1995); Trustee of Plumbers & Pipefitters Nat'l

Pension Fund v. Transworld Mechanical, 886 F. Supp. 1134 (S.D.N.Y.

1995); Lavian v. Haghnazari, 884 F. Supp. 670 (E.D.N.Y. 1995);

Arenson v. Whitehall Convalescent & Nursing Home, 880 F. Supp. 1202

(N.D. Ill. 1995); Rohland v. Syn-Fuel Associates--1982 Ltd. Partnership,

879 F. Supp. 322 (S.D.N.Y. 1995); Lemelson v. Wang Lab., 874 F.

Supp. 430 (D. Mass. 1994); Shuttlesworth v. Housing Opportunities

Made Equal, 873 F. Supp. 1069 (S.D. Ohio 1994); Tribune Co. v.

Purcigliotti, 869 F. Supp. 1076 (S.D.N.Y. 1994); and Corparacion

Insular de Seguros v. Munoz, 849 F. Supp. 126 (D.P.R. 1994).

Recent district court cases finding no "pattern" include: Gruntal

& Co., Inc. v. San Diego Bancorp, 901 F. Supp. 607 (S.D.N.Y. 1995);

Davis v. Hudgins, 896 F. Supp. 561 (E.D. Va. 1995); Trustees of the

Plumber & Pipefitter Nat’l Pension Fund v. De-Con Mechanical

Contractors, 896 F. Supp. 342 (S.D.N.Y. 1995); Thai Airways Int'l v.

United Aviation Leasing B.V., 891 F. Supp. 113 (S.D.N.Y. 1994), aff'd,

59 F.3d 20 (1995); Wobble Light v. McLain/Smigiel Partnership, 890 F.

Supp. 721 (N.D. Ill. 1995); Bonton v. Archer Chrysler Plymouth, 889 F.

Supp. 995 (S.D. Tex. 1995); Food Lion v. Capital Cities/ABC, 887 F.

Supp. 811 (M.D. N.C. 1995); Rini v. Zwirn, 886 F. Supp. 270

(E.D.N.Y. 1995); DeWit v. Firstar Corp., 879 F. Supp. 947 (N.D. lowa

1995); Pemberton Sales & Services v. Banco Popular de P. R., 877 F.

Supp. 961 (D.V.1. 1994); Mathon v. Marine Midland Bank, N.A., 875

F. Supp. 986 (E.D.N.Y. 1995); Bowdoin Constr. Corp. v. Rhode Island

Hosp. Trust Nat'l Bank, 869 F. Supp. 1004 (D. Mass. 1994); Trans

16

That the lower courts have been successfully

determining whether a "pattern" exists in the cases since

H.J. Inc. demonstrates that the requirement is not vague. As

former Judge Getzendanner of the Northern District of

Illinois, who has written many RICO opinions, stated, "After

analyzing pattern in a number of cases, I found identifying

patterns a relatively easy, low-risk task.""®

This record proves the RICO "pattern" requirement

is understood by the lower courts. It is not vague. This

Court need not consider this challenge.

This entire matter of vagueness challenges to the

pattern requirement of RICO was summarized by Professor

Joseph Bauerschmidt:

The void-for-vagueness doctrine has

been well developed in its attendant sixty

years of use by the Supreme Court. Statutes

with independent scienter requirements are

never vague. Federal statutes are rarely

vague. Civil statutes which do not impinge

upon the first amendment are almost never

vague. For the Supreme Court to violate all

World Airline, Inc. v. Berger, 864 F. Supp. 106 (E.D. Mo. 1994);

Gotham Print, Inc. v. American Speedy Print Ctrs., Inc., 863 F. Supp.

447 (E.D. Mich. 1994); and Harris Custom Builders Inc. v. Hoffmeyer,

834 F. Supp. 256 (N.D. Ill. 1993).

'® Getzendanner, Judicial “Pruning” of "Garden Variety Fraud”

Civil RICO Cases Does Not Work: It’s Time for Congress to Act, 43

Vand. L. Rev. 673, 677 (1990).

Bred en te Ag Beate ey kn cn ot eee ae

17

these contours of the void-for-vagueness

doctrine would be unprincipled, indeed,

nothing less than “"Cheatin’ yourself at

solitaire. ”!”

'’ Bauerschmidt, “Mother of Mercy - Is This The End of RICO?”

- Justice Scalia Invites Constitutional Void-for Vagueness Challenge to

RICO “Pattern”, 65 Notre Dame Law Review 1106, 1124 (1990).

18

Il.

THE "PATTERN OF RACKETEERING

ACTIVITY" ELEMENT IN THE RACKETEER

INFLUENCED AND CORRUPT ORGANIZATIONS

ACT, 18 U.S.C. §1962(c), MEETS THE DUE PROCESS

REQUIREMENT OF NOTICE WHEN APPLIED TO

PETITIONERS WHO COMMITTED HUNDREDS OF

COUNTS OF MAIL FRAUD, 28 COUNTS OF WIRE

FRAUD AND ONE COUNT OF TRAVEL ACT FRAUD

OVER A PERIOD OF AT LEAST 12 YEARS.

Petitioners claim the "pattern of racketeering activity”

element of the Racketeer Influenced and Corrupt

Organizations Act, 18 U.S.C. §1962(c) as applied to their

conduct described in the Amended Complaint violates their

substantive due process rights guaranteed by Amendments V

and XIV to the United States Constitution. They assert the

pattern element is not sufficiently well defined to put them

on reasonable notice that the conduct detailed in the

Amended Complaint was prohibited.

In their first argument, Petitioners resurrect the

thoroughly discredited claim that RICO should be limited to

traditional organized crime or its equivalent.'* They try to

contrast their breaches of contract against the murder,

gambling and drug trafficking associated with organized

'* H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229,

236-37, 243 (1989); and Sedima S.P.R.L. v. Imrex Co., Inc., 473 U.S.

479 (1985). See also, Haroco, Inc. v. American Nat’! Bank & Trust Co..,

747 F.2d 384, 390-91, 395 n.14, 399 (7th Cir. 1985), aff'd, 473 U.S.

606 (1985).

ase * *e* a 3 a ee De,

Vien a et ey Ae ek eS ee

19

crime. They ignore the charges of hundreds of instances of

criminal fraud in the Amended Complaint. They disregard

the holdings in H.J. Inc. and Sedima that RICO applies to

both legitimate and illegitimate enterprises.”

In their second argument, Petitioners claim this case

presents the constitutional challenge envisioned by Justice

Scalia in H.J. Inc. Because due process vagueness

challenges are considered on an “as applied” basis,”

Petitioners portray themselves as the diminutive David

suffering undeserved punishment from a competitive

Goliath.”” Throughout their Brief, Petitioners claim they are

not racketeers and their actions are not crimes. They seek

a mantle of innocence in order to claim they could not have

known RICO might apply to their activities.”

Actually, the Amended Complaint charges the

Petitioners with hundreds of counts of mail fraud, 28 counts

'? See also, U.S. v. Turkette, 452 U.S. 576 (1981).

® See, New York v. Ferber, 458 U.S. 747, 767-79 (1982) and

United States v. Pungitore, 910 F.2d 1084 (3rd Cir. 1990), cert. denied,

500 U.S. 915 (1991).

2! Petitioners’ Brief, p. 9.

” Petitioners start minimizing in the Questions Presented where

they claim this is "a commercial civil lawsuit premised on common law

fraud" instead of admitting the actual allegations of the Amended

Complaint charging hundreds of racketeering crimes. Petitioners’ Brief,

p. ii. This pattern of minimizing their crimes continues. Petitioners’

Brief, pp. 7, 9, 16, and 17.

20

of wire fraud and one count of Travel Act fraud.” All of

these crimes were directed to the perpetration of various

schemes to steal oil and gas leases, royalties and production

income from the Respondents. Petitioners are anything but

innocent. They have engaged in a long, continuous spree of

related crimes. Their fall to RICO’s "slingshot" is

surprising only because they did not expect to be caught.

This is not the constitutional challenge envisioned by

Justice Scalia. In that case, it will be difficult to determine

whether the charges constitute a “pattern of racketeering

activity.” This is not such a case. There are too many

related predicate acts supporting too many schemes over too

long a time period for there to be any question whether these

facts constitute a “pattern of racketeering activity."

Petitioners are not innocents caught in a web of

vagueness. According to the Amended Complaint, they

engaged in exactly the kind of unsavory business RICO was

designed to eradicate. These hundreds of crimes were

related by similarity and lasted more than 12 years. This is

a RICO “pattern” without any doubt.

The circuit court answered the Petitioners’ complaint

that they could not know their conduct might be a "pattern

of racketeering activity.” The court wrote:

” These allegations must be taken as true because the district

court granted a Rule 12(b)(6) motion to dismiss. Conley v. Gibson, 355

U.S. 41 (1957).

21

If one can take the time to avoid committing

mail fraud or wire fraud, or extortion, or

murder, or any of the other enumerated

predicate offenses, all of which are federal or

state criminal offenses in their own right, then

one can sleep safe in the knowledge that he

will not be found to have violated RICO.

The issue, bluntly and simply framed,

is whether a person of ordinary intelligence

would know that committing dozens if not

hundreds of acts of wire and mail fraud, over

the course of almost a decade against the

same victim, might constitute a pattern of

racketeering activity. Since, by its terms it

only takes a minimum of two acts, it is

simply implausible for a party to claim that it

was not aware that committing numerous

predicate acts would expose it to potential

RICO liability.”

The Petitioners do not claim the mail fraud, wire

fraud or Travel Act fraud statutes are vague because that

issue is settled. Therefore, they clearly knew or could

*58 F.3d 1101, 1108-09.

% See, e.g., U.S. v. Conner, 752 F.2d 566 (11th Cir. 1985),

cert. denied, 474 U.S. 821 (1985); U.S. v. Bohonus, 628 F.2d 1167 (9th

Cir. 1980), cert. denied, 447 U.S. 928 (1980); U.S. v. Louderman, 576

F.2d 1383 (9th Cir. 1978), cert. denied, 439 U.S. 896 (1978); U.S. v.

Feinberg, 535 F.2d 1004 (7th Cir. 1976), cert. denied, 429 U.S. 929

(1976); Roberts v. U.S., 226 F.2d 464 (6th Cir. 1955), cert. denied, 350

U.S. 935 (1956); and U.S. v. Riggs, 743 F. Supp. 556 (N.D. Ill. 1990).

22

have known they were engaging in criminal conduct each of

the multiple times they violated these statutes. Innocent

business persons they are not. They have been regularly

violating three constitutionally specific statutes for more than

twelve years. They mislead the Court with their claims of

innocence.

Petitioners ignore the fact they crossed the bright line

between the legal and the criminal each time they violated a

Statute prohibiting a RICO predicate act. Their argument

ignores their guilt of multiple predicate acts because the

predicate acts do warn the wary. Petitioners want this Court

to forget the fact they crossed this initial bright line literally

hundreds of times.

RICO provides a second bright line warning of

potential RICO liability in its definition of a “pattern of

racketeering activity.” Essentially, 18 U.S.C. § 1961(5)

provides that a "‘pattern of racketeering activity’ requires at

least two acts of racketeering activity, ... within ten years

Therefore, anyone seeking to avoid conducting a

“pattern of racketeering activity" need only avoid committing

two predicate acts within ten years of each other. By this

simple expedient, anyone can know they have not crossed

into the realm of RICO liability. Each successive crime by

Petitioners crossed this second bright line warning of

potential RICO liability.

While the commission of the second predicate act

may not make a pattern, it is certainly a second warning that

23

increased liability may attach. Petitioners do not deny the

brilliance of either of these lines.

Thus, there are two bright lines between the legal and

the "pattern of racketeering activity" required as an element

of RICO liability: 1) commission of one predicate act; and

2) commission of a second predicate act within ten years.

The vagueness claim advanced by Petitioners is that

after committing two predicate crimes within ten years, there

is no mathematical certainty how many additional crimes

will be required to create a “pattern of racketeering activity."

They fail to explain what authority grants them a

constitutional right to a third warning of their criminality

after crossing two irrefutably bright lines into the illegal.

Petitioners claim this Court's interpretation of the

"pattern" requirement is vague.” In Sedima S.P.R.L. v.

Imrex Co., Inc., 473 U.S. 479, 496 n.14 (1985) and H.J.

Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229

(1989) this Court held “pattern” required a showing of

continuity plus relationship among the predicate acts which

combine to produce a pattern. While Justice Scalia is

correct that this definition is not mathematically precise, it

is an adequate standard to pass due process muster.

Due process does not require the specificity of a

mathematical formula. All the Constitution requires is a

* See Petitioners’ Second Question Presented.

24

reasonably understandable standard. As this Court said in

Grayned v. City of Rockford, 408 U.S. 102, 110 (1972):

Condemned to the use of words, we can

never expect mathematical certainty from our

language.

Due process requires a standard. "Pattern of

racketeering activity" as defined by this Court is undeniably

a standard. It clearly counsels anyone engaged in repeated

commission of RICO predicate crimes that they risk passing

from the just criminal into the realm of RICO liability.

The "pattern of racketeering activity” is the third

threshold for RICO liability. The first is the commission of

one predicate crime. The second is the commission of a

second predicate crime within a decade. Not even the

Petitioners are able to claim these first two thresholds are

vague. They only complain of the third threshold. Yet this

third threshold is well within the bounds of constitutional

clarity.

In Hoffman Estate. v. Flipside, Hoffman Estates, Inc. ,

455 U.S. 489, 498-499 (1982) this Court stated, "The

standards for evaluating vagueness were enunciated in

Grayned v. City of Rockford, 408 U.S. 104, 108-109

(1972)." There this Court noted the two considerations in

vagueness analysis are fair notice and fair enforcement.

"Economic regulation is subject to a less strict vagueness

test...." There is also greater tolerance for "enactments with

civil rather than criminal penalties because the consequences

of imprecision are less severe.”

25

This Court has also noted “[E]very reasonable

construction must be resorted to, in order to save a statute

from unconstitutionality." Chapman v. United States, 500

U.S. 453, 464 (1991).

This is especially true of civil statutes: "To

invalidate a civil statute, a reviewing court must find that ‘no

standard of conduct is specified at all." Medical Soc. of

N.Y. v. Cuomo, 777 F. Supp. 1157, 1165 (S.D. N.Y. 1991),

aff'd, 976 F.2d 812 (2nd Cir. 1992), quoting Coates v. City

of Cincinnati, 402 U.S. 611, 614 (1971).

In fact, there was no standard of any kind in Giaccio

v. Pennsylvania, 382 U.S. 399, 403 (1966), considering a

Pennsylvania statute authorizing a jury to determine whether

an acquitted criminal defendant should pay the costs of

prosecution. This Court found this statute void for

vagueness because it "left ... jurors free to decide, without

any legally fixed standards, what is prohibited and what is

not in each particular case."

The "pattern requirement" of RICO does provide a

comprehensible standard. This is best demonstrated by the

hundreds of lower court cases actually applying the

standard.”” The lower courts are not having unreasonable

difficulty determining which configurations of facts constitute

a "pattern" and which do not.

Petitioners supply no contrary analysis. They claim,

"The Courts of Appeals are now struggling with determining

”” See footnotes 12, 13, 14 and 15 supra.

26

pattern....""* But their only support for this claim is a list of

cases where the circuits have readily applied the "pattern of

racketeering activity" standard. In each case, there is an

analysis of the facts to determine whether the predicate acts

amount to a "pattern." There is no evidence of a struggle.

"Pattern of racketeering activity" is like many other

phrases in the law that lack mathematical precision but set a

constitutionally permissible standard. Other phrases this

Court has approved include: "restraint of trade," "an active

part in management of political campaigns," "conduct

unbecoming an officer and a gentleman,"*' and "crimes

against nature. "*

The RICO "pattern" requirement is no more difficult

than any of these phrases. There is no need for further

consideration of this matter by this Court.

* Petitioners’ Brief p. 23.

® Nash v. U.S., 229 U.S. 373 (1913).

%® Civil Service Commission v. Letter Carriers, 413 U.S. 548

(1973).

*' Parker v. Levy, 417 U.S. 733 (1974).

® Rose v. Locke, 423 U.S. 48 (1975).

27

Il.

THE CONFUSING THIRD QUESTION

PRESENTED SHOULD BE DISMISSED BECAUSE IT

WAS NOT RAISED IN EITHER THE DISTRICT OR

CIRCUIT COURTS AND BECAUSE IT IS

FORECLOSED BY PRECEDENT.

A. New Arguments Are Prohibited On Appeal

Petitioners’ Third Question Presented should be

rejected because it is new to this litigation. That it was not

argued or considered below is demonstrated by the

Petitioners’ Statement of the Case. Their Course of

Proceedings describes no consideration of this issue by the

lower courts.*

It is axiomatic that this Court will not hear arguments

raised for the first time on appeal. Lytle v. Household Mfg.,

Inc., 494 U.S. 545, 551 n.3 (1990); Granfinanciera, S.A. v.

Nordberg, 492 U.S. 33, 38 (1989); DeShaney v. Winnebago

County Dept. of Social Services, 489 U.S. 189, 195 n.2

(1989); and City of Springfield, Mass. v. Kibbe, 480 U.S.

257, 259 (1987).

The Court has said, "Our normal practice... is to

refrain from addressing issues not raised in the Court of

Appeals." E.E.0.C. v. Federal Labor Relations Authority,

476 U.S. 19, 24 (1986).

* Petitioners’ Brief, p. 4 - 5.

28

Petitioners’ third argument is entirely new to this

case. Below, Petitioners’ argued RICO is void for

vagueness. They never examined the relation between the

“enterprise” and “pattern” elements of RICO. See Haroco

v. American Nat. B. & T. Co. of Chicago, 473 U.S. 606,

608 (1985) (refusing to “consider petitioners’ late-blooming

argument that the complaint failed to allege a violation of §

1962(c)").

This Court should decline review of this question

because it is new to this case.

B. The Apparent Argument

According to Petitioners, RICO’s pattern clause

requires "a RICO defendant’s predicate acts [to] amount to

conduct (direction) of the alleged enterprise’s affairs and not

just the defendant’s own business affairs."™

Petitioners claim a defendant’s business affairs cannot

be actionable predicates. The individual components of their

argument require an enterprise to have a business life that

includes acts distinct from the predicates forming a pattern;

require a distinction between the business affairs of a

defendant and an enterprise; and require an “enterprise” to

consist of persons different from the defendants named in a

complaint. There is no authority for such requirements.

™* Petitioners’ Brief, p. 25.

29

C. Turkette Has Settled This Issue

Even if Petitioners adequately preserved their third

argument for review, the Court should deny certiorari

because the issue raised was foreclosed by United States v.

Turkette, 452 U.S. 576 (1981).

Petitioners’ argument ignores enterprises formed to

pursue only illegal ends with members who do nothing but

advance the enterprise's illicit interests. In a such a setting,

a defendant would be a full-time wrongdoer totally devoted

to the enterprise’s nefarious ends. This would obviate any

difference between a defendant's affairs and those of the

enterprise.

Yet under Petitioners’ view, such persons would be

immunized because they did not pursue acts distinct from the

racketeering that was the enterprise’s raison d’étre. Further,

in such an enterprise, all its members are wrongdoers and

should be exposed to liability. There is no rational or

statutory basis to distinguish between members of such an

enterprise and the persons exposed to liability. ji

Turkette \ong ago settled these issues in Respondents’

favor. Turkette established that RICO applies to "legitimate"

and wholly “illegitimate” enterprises. Turkette, 452 U.S. at

585 ("There is no inconsistency or anomaly in recognizing

that § 1962 applies to both legitimate and illegitimate

enterprises"). RICO accepts that “an enterprise may be

organized solely for illegitimate purposes." R.A.G.5.

Couture, Inc. v. Hyatt, 774 F.2d 1350, 1353 (Sth Cir.

1985), citing Turkette. Further, there is no need for

30

members of a RICO enterprise to pursue acts other than the

racketeering affairs of an enterprise.

There is no need to review Petitioners’ third

argument. It treads on worn ground.

CONCLUSION

The writ of certiorari should be denied.

Respectfully submitted,

DAVID D. NOBLE

Counsel of Record

JOHN E. SULLIVAN III

NOBLE & SULLIVAN

Lawyers for Respondents

1025 Huron Road

Cleveland, Ohio 44115

(216) 771-1212

JO ELLEN DIEHL YEARY

Lawyer for Respondent

COLUMBIA NATURAL

RESOURCES, INC.

900 Pennsylvania Avenue

Charleston, West Virginia

25362

(304) 353-5166

4

t