this amounts to an untimely motion to amend the Complaint.
Initially, I reject defendants' procedural argument. I believe the Complaint can properly be read to assert claims under any and all sections of the RICO statute which may be pertinent. In any event, the various subparts of § 1962 are so closely related that it is unlikely that such an amendment would be likely to cause prejudice. And the argument about untimeliness loses much of its force by virtue of the recent joint request by all parties for postponement of the scheduled trial. I therefore address the merits of the defendant's motion on the assumption that plaintiffs are asserting claims under the RICO statute in general and each and every one of its parts.
It is the law of this circuit that a defendant may not be held liable under § 1962(c) unless, through a pattern of racketeering activities, it conducts (or participates in the conduct of) the affairs of an enterprise other than itself. B.F. Hirsch v. Enright Refining Co., supra. Specifically, before the defendant Bache can be held liable under § 1962(c), it must be shown that Bache conducted the affairs of an enterprise other than Bache, through the alleged pattern of racketeering activities. In my judgment, that showing has not been, and cannot be, made in this case. In this context, the various branch offices of Bache must be regarded as simply a part of the defendant Bache, and not as separate entities -- even within the flexible definitions of RICO. Moreover, it was plainly the business of the defendant Bache which was being conducted through the alleged pattern of racketeering activities, and not any separately identifiable business of the various branches.
Plaintiffs make a further argument that, even if Bache may not be held directly liable under § 1962(c), the individual defendants can be, and Bache would be liable for their activities on a respondeat superior theory. I reject that argument, as inconsistent with B.F. Hirsch v. Enright Refining Co., supra. To accept plaintiff's argument would be to read the enterprise requirement out of the statute entirely, whenever a corporate defendant is involved.
I therefore conclude that, to the extent plaintiffs are seeking to recover under § 1962(c), Bache's motion for partial summary judgment must be granted. That leaves the claims under § 1962(a) and (d).
Plaintiffs correctly argue that there is no separate "enterprise" requirement under § 1962(a), and that a conspiracy under § 1962(d) may have as its object a violation of (a). In short, plaintiffs contend that Bache can be held liable for a conspiracy under (d) and for violations of (a).
The difficulty with the § 1962(a) argument, in my view, is that, on the undisputed facts of this case, plaintiffs lack standing to pursue a claim for damages under that section. Stated otherwise, on this record it is inconceivable that plaintiffs suffered any injury as a result of any violation of § 1962(a) which might have occurred. The damages claimed by these plaintiffs were caused by the alleged pattern of racketeering activities, culminating in the challenged securities transactions; whether the defendants did or did not invest the proceeds in a business affecting commerce cannot have been causally related to any injury to plaintiffs.
I have not overlooked the later developments in the B.F. Hirsch v. Enright Refining Co. case, supra. In that case, the district court had initially imposed liability under § 1962(c). The Court of Appeals reversed, because no separate "enterprise" had been shown, but noted that there was no such requirement under § 1962(a). The case was remanded for further proceedings, whereupon, in an opinion reported at 617 F. Supp. 49 (D.N.J. 1985), the district court held that defendant's conduct was also a violation of § 1962(a), and reinstated its judgment for treble damages. That case was not a securities case, however, and the district court expressly found -- albeit without elaboration -- ". . . plaintiff has suffered a racketeering injury by reason of Enright's violation of § 1962(a)." No such finding would be tenable on this record.
In my view, plaintiffs' claims under § 1962(d) either stand or fall depending upon the fate of their claims under (a) or (c). That is, a conspiracy under § 1962(d) to violate § 1962(c) cannot be established without showing a separate "enterprise"; and a conspiracy under § 1962(d) to violate § 1962(a) can have had no causal connection with any damages sustained by these plaintiffs.
For all of these reasons, defendant Bache's motion for partial summary judgment will be granted, and Count IV of the plaintiffs' Complaint will be dismissed.
AND NOW, this 7th day of April, 1986, it is ORDERED:
1. The motion of Prudential-Bache Securities, Inc. for partial summary judgment is GRANTED.
2. As to the said defendant, Count IV of the Complaint is DISMISSED.
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