Slattery v. Costello, 586 F. Supp. 162 (D.C.C. 1983); In re Catanella and E.F. Hutton & Co. Securities Litigation, 583 F. Supp. 1388 (E.D. Pa. 1984); Bankers Trust v. Feldesman, 566 F. Supp. 1235 (S.D.N.Y. 1983); Kimmel v. Peterson, 565 F. Supp. 476 (E.D. Pa. 1983); Eisenberg v. Gagnon, 564 F. Supp. 1347 (E.D. Pa. 1983); Hunt International Resources Corp. v. Binstein, 559 F. Supp. 601 (N.D. Tex. 1982); Crocker National Bank v. Rockwell International Corp., 555 F. Supp. 47 (N.D. Cal. 1982); Meineke Discount Muffler Shops, Inc. v. Noto, 548 F. Supp. 352 (S.D.N.Y. 1982); Mauriber v. Shearson/American Express, 546 F. Supp. 391 (S.D.N.Y. 1982).
Upon consideration of the reported decisions on this issue, I decline to adopt this limitation on the availability of the civil RICO remedy. As Judge Giles noted in his thoughtful and thorough analysis of this issue in Kimmel v. Peterson, 565 F. Supp. 476, 490-93 (E.D. Pa. 1983), the requirement of a nexus to organized crime is inconsistent with the clear terms of the statute and the vast majority of court decisions as well as the legislative history of RICO. Consequently, I conclude that no organized crime nexus must be pleaded or proved to state a claim under RICO's civil liability provisions.
d) Distinction between enterprise and defendant
Defendant contends that the complaint fails to identify an "enterprise" apart from the defendant. It asserts that such a distinction between the enterprise and the defendant is essential to RICO liability.
Plaintiffs respond that RICO established no requirement that the defendant and the enterprise be distinct entitles. In addition, plaintiffs assert that the complaint identifies both defendant and Energy Resources as "enterprises." Therefore, plaintiffs argue, an enterprise is identified in the complaint which is distinct from the defendant.
At the time of the filing of the briefs on this motion, there was no definite Third Circuit ruling on this issue. See Seville Industrial Machinery Corp. v. Southmost Machinery Corp., 742 F.2d 786, 790 (3d Cir. 1984). However, on December 31, 1984, the court, speaking through Judge Seitz, held that "a violation of section 1962(c) by a corporate entity requires an association with an enterprise that is not the same corporation." B.F. Hirsch v. Enright Refining Company, 751 F.2d 628, 634 (3d Cir. 1984). Therefore, it is necessary to look to the complaint to determine whether plaintiffs have identified adequately an enterprise associated with the defendant which is an entity other than the defendant.
The complaint states that "Energy Resources and Hutton are enterprises within the meaning of 18 U.S.C. § 1961(4)." Complaint at para. 33. Consequently, an enterprise other than the defendant -- Energy Resources -- is identified in the complaint. The only remaining question is whether the complaint alleges a relationship between defendant and Energy Resources of the type which would form the basis for RICO liability.
RICO requires (a) that the defendant be "employed by or associated with" the enterprise and (b) that the defendant "conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity." 18 U.S.C. § 1962(c). Paragraph 35 of the complaint plainly satisfies the second of those requirements by alleging that the "defendant [Hutton] knowingly conducted and participated in the conduct of the affairs of Energy Resources and Hutton through a pattern of racketeering activity." The complaint does not in terms allege that Hutton was "associated with" Energy Resources. Nonetheless, I conclude that the allegation that Hutton "knowingly conducted and participated in the conduct of Energy Resources" sufficiently comprehends the required association of Hutton and Energy Resources to satisfy the pleading requirements of RICO. Accordingly, I will deny the motion to dismiss the RICO count on this ground.
Plaintiff assert that defendant violated both § 1962(c) of RICO and § 1962(d). The latter subsection states:
It shall be unlawful for any person to conspire to violate any of the provisions of subsections (a), (b), or (c) of this section.
Defendant contends that the allegations of conspiracy in the present complaint are deficient because they allege solely a conspiracy between defendant and itself which is legally impossible. Defendant then argues that, assuming arguendo, the complaint alleges a conspiracy between defendant and its employees, that is also legally insufficient to state a conspiracy claim. Finally, defendant requests that, if the claim pursuant to subsection (d) of section 1962 is allowed to remain in the action, plaintiffs be required to replead that claim to provide more specificity as to the nature of the conspiracy and the identity of the conspirators.
Plaintiffs respond that the complaint clearly states that defendant conspired with others although the identities of those others are not provided. Plaintiffs suggest that it is obvious from the complaint that the others with whom defendant conspired were the other promoters of Energy Resources. Furthermore, plaintiff attacks the legal proposition asserted by defendant and cites authority for the proposition that a corporation may be held liable for a conspiracy among its agents. Before I can consider the legal arguments of defendant in support of the motion to dismiss, I must be satisfied that plaintiffs' complaint asserts facts which would make out the type of legal claim challenged in defendant's motion. Therefore, in the present case, I should only consider the challenges to the legal viability of claims of intracorporate conspiracy if such claims appear in the complaint. However, the conspiracy allegations in the present complaint are so vague that it is impossible to determine whether plaintiffs have alleged a conspiracy among Hutton's employees or between Hutton and its employees as opposed to some other type of conspiracy.
Rule 8 of the Federal Rules of Civil Procedure requires only that the pleader present a short plain statement of the claim showing the pleader is entitled to relief. Unlike fraud and mistake, see Rule 9(b), it is unnecessary to plead conspiracy claims with any greater specificity than other legal claims. However, "the complaint must contain sufficient information for the court to determine whether or not a valid claim for relief has been stated and to enable the opposing side to prepare an adequate responsive pleading." C.A. Wright & A.R. Miller, Federal Practice and Procedure § 1233 at 181 (1969). "A general allegation of conspiracy without a statement of facts was an allegation of legal conclusion and insufficient to state a cause of action." Black & Yates, Inc. v. Mahogany Ass'n, Inc., 129 F.2d 227, 232 (3d Cir. 1941) cert. denied, 317 U.S. 672, 87 L. Ed. 539, 63 S. Ct. 76 (1941).
The only conspiracy allegations are found in the following paragraphs:
34. Defendant individually and in conspiracy with others engaged in a pattern of racketeering activity within the meaning of 18 U.S.C. § 1961(5).