Appeal from the United States District Court for the District of New Jersey.
Seitz, and Becker, Circuit Judges, and Teitelbaum, District Judge.*fn*
The defendant, Enright Refining Company, Inc., appeals from a judgment entered after a bench trial. The district court found that the defendant was liable for breach of contract, fraud, and civil violation of title IX of the Organized Crime Control Act, Racketeer Influenced and Corrupt Organizations (RICO), 18 U.S.C. § 1961-1968 (1983). This court has jurisdiction under 28 U.S.C. § 1291 (1983).
Bright and yellow, hard and cold."
Thomas Hood, Miss Kilmansegg and
Her Precious Leg. Her Moral.
The plaintiff, B. F. Hirsch, is a jewelry manufacturing firm in New York City specializing in the production of gold rings. As a by-product of its manufacturing process, the plaintiff produces scrap gold. This scrap gold, usually in the form of 10 and 14 karat gold, is accumulated and periodically sent to a refiner to be melted down and refined into find gold of at least 99.95% purity. The refiner returns either an agreed amount of the fine gold or pays cash for the metals.
Gold refiners generally use one or both of two forms of payment for their services. First, there are often refining and handling fees based on the weight of the refined metal and whether gold or cash is to be returned. Second, some refiners account for less than 100% of the precious metal that is sent to them. This second charge is defined in terms of an "accountability" or "retainage." Thus, a refiner with a 98% accountability would have a 2% retainage and would return or pay for 98% of the assayed amount of gold in the material shipped to the refiner.
Between 1973 and September 1976, the plaintiff sent 47 shipments of scrap gold to the defendant's predecessor, the Enright Refining Company, a New Jersey refiner. The district court found that during this period, the Enright Refining Company maintained a 100% accountability and charged only refining and handling fees.
In September 1976, the assets of the Enright Refining Company were sold to an unrelated corporation, the Enright Refining Company, Inc., the defendant in this action. The new company, although under different ownership, continued operation with basically the same personnel and facilities.
Between October 1976 and December 1977, the plaintiff sent 21 shipments to the defendant. The defendant, without disclosing that it had what the district court found was a new policy, began charging a 0.5% retainage for gold and a 1.5% retainage for silver. The parties stipulated that the value of the gold and silver not returned to the plaintiff during this period was $12,196.19. At the conclusion of each transaction, the defendant would send a report letter stating the contents of the gold shipment and sometimes the assay results. Both the contents ...