The opinion of the court was delivered by: COHILL
Plaintiff, Chambers Development Company, Inc. ("Chambers"), a company engaged in the trash and waste disposal business in Southwestern Pennsylvania, filed this action against the defendants alleging violations of the Racketeer Influenced and Corrupt Organizations Act of 1970, 18 U.S.C. § 1961, et seq. ("RICO"), the Sherman Antitrust Act, 15 U.S.C. § 1, et seq., and Pennsylvania common law. All of the defendants have submitted Motions to Dismiss pursuant to Fed. R. Civ. P. 12(b).
It is these motions which we now consider.
Defendant, Browning-Ferris Industries, Inc. ("BFI") is a Texas corporation which, like the plaintiff, is engaged in the business of trash hauling and waste removal. BFI has several subsidiaries throughout the country, one being Browning-Ferris Industries of Pennsylvania, Inc. ("BFI of Pa."), another defendant in this case.
The plaintiff, Chambers, contends that in or about 1978, BFI and BFI of Pa. began an active campaign to gain control of the refuse and waste collection business in Western Pennsylvania. To accomplish this goal, BFI and BFI of Pa. attempted to eliminate their principal competition, including Chambers, through various means such as offering plaintiff's customers lower prices, rebates and free services, establishing "surrogate" refuse collection companies which would take over smaller companies, and bribing various officials in the Pennsylvania Department of Environmental Resources ("DER") and Allegheny County. See Plaintiff's Complaint para. 22. Several companies were allegedly established, and several individuals were employed to aid in the effectuation of the takeover scheme.
One company allegedly formed to assist in the destruction of competition was Mazzaro, Inc., a small landfill company in Allegheny County, Pennsylvania. "Landfill" is the disposal of trash and garbage by burying it under layers of earth in low ground. The plaintiff alleges that in 1977, BFI and BFI of Pa. contacted Carol Mazzaro, the owner of a landfill area adjacent to one of the landfill areas owned by BFI of Pa., and offered to purchase her landfill area. However, the defendants wanted Ms. Mazzaro to continue to operate the landfill area in her name so that the true owner would not be revealed. She refused.
To coerce Ms. Mazzaro into cooperation, BFI of Pa., through its vice president and general manager, William Curtis, allegedly paid bribes to the DER and Allegheny County so that these agencies would economically harass Ms. Mazzaro and threaten to shut her landfill area if she did not make changes.
By 1980, Ms. Mazzaro realized that she would not be able to continue the landfill as she did not have the money to make the ordered improvements. She therefore agreed with defendants, Curtis, Clifford Bright (BFI of Pa.'s controller), Edward Benko (BFI of Pa.'s sales manager), William Pittman (BFI of Pa.'s operations manager), and Louis Mazzaro (an employee of BFI of Pa. and Ms. Mazzaro's cousin) to set up a surrogate refuse company, named Mazzaro, Inc., which would serve as a front and allow BFI and BFI of Pa. to acquire small refuse collection companies which in turn would bid against Chambers.
Horse Trucking, Inc., the second company allegedly used by the defendants to effectuate their scheme, was supposedly created by BFI through Messrs. Curtis and Mazzaro for "the sole purpose of infusing money into Mazzaro, Inc." Plaintiff's Complaint para. 35. BFI purportedly gave Horse Trucking a contract to haul trash, and the money paid to Horse Trucking by BFI was then diverted into Mazzaro, Inc.
The relationship between the two companies and their relevance to the case at bar can be summarized as follows:
Mazzaro, Inc. and Horse Trucking were operated by BFI through the Defendants Curtis, Bright, Benko, Pittman and Louis Mazzaro for seventeen months beginning on or about May, 1980. During this time, Mazzaro, Inc. and its acquired subsidiaries, all subsidized by BFI, took contracts away from Chambers and kept other prospective customers from contracting with Chambers by offering lower prices than Chambers because of the secret subsidy.
Plaintiff's Complaint para. 37.
At the same time that Mazzaro, Inc. and Horse Trucking were being used to prevent competition, BFI and BFI of Pa. were purportedly using Defendant, Anthony Phillips, Jr. and his affiliated refuse collection companies "as surrogates against Chambers". Plaintiff's Complaint para. 41. BFI of Pa. allegedly gave Phillips a contract which was awarded to it by the City of Pittsburgh, thus, making Phillips its surrogate. Part of the plan was that Phillips would submit phony invoices to the city for trash pickups that were never made, and "this illegal money was [then] shared by Phillips, the defendant Curtis and the City Supervisor who would forward the phony invoices for payment by the City." Plaintiff's Complaint para. 42. Curtis would use this money to fund Mazzaro, Inc. and for bribes to government officials. Id. at para. 43.
In addition to these specific schemes involving Mazzaro, Inc., Horse Trucking, Inc., and Defendant Phillips, the plaintiff contends that BFI and BFI of Pa. generally used surrogate companies and paid bribes to officials of the DER and Allegheny County to rig bids and prevent Chambers from receiving any trash-hauling contracts.
In Count I of its complaint, Chambers seeks treble damages from the defendants for alleged RICO violations, more specifically, violations of the four subsections of RICO, 18 U.S.C. § 1962 (a)-(d).
18 U.S.C. § 1962 (a)-(d) provides in pertinent part,
§ 1962. Prohibited activities
(a) It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering 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, to 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 engaged in, or the activities 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 participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.
(d) It shall be unlawful for any person to conspire to violate any of the provisions of subsections (a), (b), or (c) of this section.
B. Count II - Sherman Act
Count II alleges that the defendants' conduct constituted "a combination and conspiracy in restraint of trade" in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and "a monopolization, an attempt to monopolize, and a combination and conspiracy to monopolize trade and commerce" in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2. Plaintiff's Complaint, paras. 62, 63. Chambers contends that because of these violations, the plaintiff lost contracts and suffered damage to its business reputation. Id. at para. 64.
C. Counts III and IV - Pennsylvania State Claims
Counts III and IV of the complaint are claims under state law which apply only to BFI and BFI of Pa.
In Count III, the plaintiff alleges that BFI and BFI of Pa. intentionally interfered with plaintiff's business relationships by encouraging plaintiff's customers to leave the plaintiff and contract with BFI. The means allegedly used to harm the plaintiff's business relationships include, inter alia, slanderous statements about the plaintiff, the withholding of funds due the plaintiff, and the violation of contracts between the plaintiff and BFI. Plaintiff's Complaint, para. 66. As a result of these actions, "the plaintiff was denied the benefit of certain contracts with third parties," and "has been forced to incur substantial indebtedness and suffer financial harm." Id. at paras. 67 and 69.
In Count IV, the plaintiff alleges that BFI and BFI of Pa. breached a contract between the parties. By agreement, BFI of Pa. brought its waste pickups to the plaintiff's landfill area, and the plaintiff accepted the refuse material. BFI of Pa. purportedly failed to pay Chambers the amounts due and owing for the right to deposit the waste material in the plaintiff's landfill area, in breach of the alleged contract.
For purposes of a motion to dismiss, the complaint is construed in the light most favorable to the nonmoving party and the allegations and all reasonable inferences are accepted as true. Miree v. DeKalb County, 433 U.S. 25, 27, 53 L. Ed. 2d 557, 97 S. Ct. 2490 n.2 (1977); Jenkins v. McKeithen, 395 U.S. 411, 421, 23 L. Ed. 2d 404, 89 S. Ct. 1843 (1969); Hochman v. Board of Education of Newark, 534 F.2d 1094 (3d Cir. 1976); Butz v. Hertz Corporation, 554 F. Supp. 1178 (W.D. Pa. 1983). A complaint should not be dismissed unless it appears to a certainty that a plaintiff could not prove a set of facts that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). With these general principles in mind, we will consider the specific claims in Chambers' complaint.
Several arguments have been made by the defendants as to why the plaintiff's RICO claims must be dismissed. Most of these arguments relate generally to the plaintiff's complaint and have been raised in some form by all of the defendants. We will address these general claims first and then consider the specific arguments raised by individual defendants.
In all RICO claims, the plaintiff must first allege the existence of an "enterprise." Eaby v. Richmond, 561 F. Supp. 131 (E.D. Pa. 1983). See also United States v. Kopituk, 690 F.2d 1289 (11th Cir. 1982), cert. denied 461 U.S. 928, 103 S. Ct. 2089, 77 L. Ed. 2d 300 (1983).
Section 1961(4) of Title 18 defines an "enterprise" as including
any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.
As evidenced by this statutory definition, RICO encompasses two types of enterprises: legal entities and "associations in fact." United States v. Turkette, 452 U.S. 576, 581-582, 69 L. Ed. 2d 246, 101 S. Ct. 2524 (1981). "The first encompasses organizations such as corporations and partnerships . . ." Id. at 581, and courts have uniformly held that such activities are appropriately alleged as RICO enterprises. See Bennett v. Berg, 685 F.2d 1053 (8th Cir.), cert. denied sub nom. Prudential Insurance Co. v. Bennett, 464 U.S. 1008, 104 S. Ct. 527, 78 L. Ed. 2d 710 (1983). Though not as easy to establish, mere associations of a group of individuals also qualify as "enterprises." See e.g. United States v. Aleman, 609 F.2d 298 (7th Cir. 1979), cert. denied, 445 U.S. 946, 100 S. Ct. 1345, 63 L. Ed. 2d 780 (1980); United States v. Elliott, 571 F.2d 880 (5th Cir.) rehearing denied 575 F.2d 300 (5th Cir. 1977), cert. denied 439 U.S. 953, 99 S. Ct. 349, 58 L. Ed. 2d 344 (1978).
In paragraphs 15, 16, 17 and 18 of the plaintiff's complaint, the plaintiff names four enterprises; BFI (which the plaintiff defines as BFI and BFI of Pa., See Plaintiff's Complaint, para. 5), Mazzaro, Inc., Horse Trucking, Inc. and a group of individuals comprised of Messrs. Curtis, Bright, Benko, Pittman, Mazzaro and Humphreys.
As legal corporate entities, BFI, Mazzaro, Inc. and Horse Trucking, Inc. clearly fall within the first category of an "enterprise" as defined by section 1961(4).
The individual defendants are "a group of individuals associated in fact although not a legal entity," 18 U.S.C. § 1961(4), and therefore, also comprise an enterprise.
As such, we find that the plaintiff's complaint sufficiently alleges the first element of any RICO claim, i.e. an "enterprise."
The second element required to establish any violation of 18 U.S.C. § 1962(a)-(d) is that the enterprise must affect interstate commerce. Eaby, supra. The statute requires that the activity of the enterprise, not each predicate act of racketeering, must have some affect on interstate commerce. United States v. Nerone, 563 F.2d 836, 852-854 (7th Cir. 1977), cert. denied 435 U.S. 951, 98 S. Ct. 1577, 55 L. Ed. 2d 801 (1978). A "nexus of the enterprise to interstate or foreign commerce, albeit minimal" must be shown. United States v. ...