The defendants have also offered an alternate standing test in furtherance of their motion to dismiss. The defendants assert that plaintiffs must aver a "racketeering enterprise injury" to have standing under 18 U.S.C. 1964(c). The few courts that have referred to the "racketeering enterprise injury" standing requirement have not presented a clear definition of what exactly is a "racketeering enterprise injury." To the extent that the term includes the type of injury which has also gone under the name of "competitive injury" this court has already determined that 18 U.S.C. § 1964(c) does not require such a showing. Similarly, if the term refers to the status of the defendants as being considered members of "organized crime" then this Court has previously found that argument to be without merit. About the only feature of a "racketeering enterprise injury" that courts have been able to articulate is that a "racketeering enterprise injury" does not include the injury due solely to the commission of predicate criminal racketeering acts found in 18 U.S.C. § 1961(1) (1976). Obviously, it is difficult to describe, much less apply, such a standing requirement when all that can be said about it is that there is general agreement on what does not constitute "racketeering enterprise injury." Nevertheless, the Court will attempt to describe what may be meant by the term "racketeering enterprise injury."
Those few courts which have used the term "racketeering enterprise injury" have reached the conclusion that 18 U.S.C. § 1964(c) requires an allegation of this type of injury for two primary reasons. First, some courts have based their conclusions on a general analogy to antitrust law and reason that the general purpose of RICO is served when standing is limited to those injured by conduct Congress intended to proscribe. See Landmark Savings & Loan v. Rhoades, 527 F. Supp. 206, 208 (E.D.Mich.1981). A second reason for imposing a "racketeering enterprise injury" standing requirement has been found in the "by reason of a violation of section 1962" language contained in 18 U.S.C. § 1964(c). See Harper v. New Japan Securities Int'l, 545 F. Supp. 1002 (C.D.Cal.1982). Despite these two different approaches to standing under 18 U.S.C. § 1964(c), one based on a general reading of RICO and the other on the terms of civil RICO, this Court still has difficulty in articulating what type of injury satisfies either approach.
If "racketeering enterprise injury" merely means that a party has standing only if he has suffered injury from a violation of 18 U.S.C. § 1962, then it adds little or nothing to the terms of the statute itself. References to the general purpose of the RICO statute to support a narrow construction have been explicitly rejected by both the Supreme Court, United States v. Turkette, 452 U.S. 576, 101 S. Ct. 2524, 69 L. Ed. 2d 246 (1981), and Congress, see 18 U.S.C. § 1961, note (1976). One plausible explanation for the creation of the term "racketeering enterprise injury" might be that the statute should be available only to those victims whose injury can be connected with a confluence of the statutory terms contained in RICO. Perhaps to show a "racketeering enterprise injury" a plaintiff must demonstrate that his business or property injury stemmed from the defendant's racketeering conduct in an enterprise which is specifically prohibited under the terms of 18 U.S.C. § 1962(a), (b), (c), or (d). Again, however, this appears to mean little more than that the plaintiff must allege an injury attributable to a violation of RICO's criminal provisions.
On the other hand the term "racketeering enterprise injury" may imply that the plaintiff must somehow link his injuries to the operations of a criminal "enterprise" within the meaning of 18 U.S.C. § 1961(4) (1976). See Van Schaick v. Church of Scientology, 535 F. Supp. 1125 (D.Mass.1982). This definition of "racketeering enterprise injury", however, cannot be reconciled with prevailing judicial constructions of 18 U.S.C. § 1962. The majority of circuits have interpreted the Supreme Court's decision in United States v. Turkette, 452 U.S. 576, 101 S. Ct. 2524, 69 L. Ed. 2d 246 (1981) as affirming the "application of RICO to situations where the enterprise was, in effect, no more than the sum of the predicate racketeering acts." United States v. Bagaric, 706 F.2d 42, 55 (2d Cir.1983); see also United States v. Cagnina, 697 F.2d 915, 921 (11th Cir.1983); United States v. Bagnariol, 665 F.2d 877, 890-91 (9th Cir.1981). Accordingly, it would be inconsistent to force a plaintiff to connect his injuries strictly to the offending "enterprise" as opposed to the underlying criminal racketeering acts. Of course, if "racketeering enterprise injury" means business or property injury to plaintiffs "enterprise" then it is nothing more than a different name for "competitive injury" which this Court has already rejected.
Having failed to define what the term "racketeering enterprise injury" is supposed to mean, all that remains is the often repeated statement that "racketeering enterprise injury" does not include injury attributable only to the underlying criminal predicate acts. This statement is itself somewhat hard to understand. Presumably, any person injured by the activities of racketeers as this group is defined by RICO will suffer direct injury from the actual criminal acts of the racketeers. In fact, Congress intentionally selected a group of criminal offenses as definitive of the type of conduct engaged in by organized criminals. The Eighth Circuit, for example, has singled out the elimination of the underlying pattern of criminal conduct as Congress's primary goal when RICO was enacted. United States v. Dean, 647 F.2d 779, 787 (8th Cir.), on rehearing, 667 F.2d 729 (8th Cir.1981), cert. denied, 456 U.S. 1006, 102 S. Ct. 2296, 73 L. Ed. 2d 1300 (1982). As that Circuit stated: "Supporters of RICO legislation, explaining its operation during the Congressional debate, shared the view that the evil to be punished was the pattern of racketeering activities and its injection into legitimate businesses, not the conversion of legitimate enterprises, into corrupt ones." Id. at 787. By statutory design the victim's compensable injuries from the underlying criminal conduct will frequently be identical to those caused by the racketeering violation. Finally, the compensatory and deterrent purposes of RICO would be frustrated if a racketeering victim were prohibited from bringing suit on the basis of injuries directly attributable to predicate criminal acts. See Cenco Inc. v. Seidman & Seidman, 686 F.2d 449, 457 (7th Cir.1982) (Civil RICO to be construed in light of its "compensatory and deterrent objectives").
In conclusion, the Court is unable to provide a satisfactory definition for the term "racketeering enterprise injury." More importantly, the various reasons that have been proffered for the imposition of this type of a standing requirement are inconsistent with the objectives of the racketeering statute as well as the statutory scheme set forth in 18 U.S.C. § 1962. Hence, the Court will deny the defendants' request to impose a "racketeering enterprise injury" standing requirement on the plaintiffs in this case. This Court is satisfied that plaintiffs, having alleged a compensable injury to their "business or property" by reason of defendants' alleged violation of 18 U.S.C. § 1962, fall within that category of racketeering victims afforded a cause of action under 18 U.S.C. § 1964(c). Of course, the Court does not wish to imply any view on the merits of plaintiffs' case. Rather, this Court merely holds that plaintiffs have alleged sufficient facts in their complaint to prevail over defendants' motion to dismiss for lack of standing.
The defendants raise one final argument in favor of dismissal at this early stage. During oral argument defense counsel voiced a general policy argument in favor of dismissing the plaintiffs' section 1964(c) claims even though they may be well-pleaded. Defendants contend that because the plaintiffs have other, more traditional and more specific claims available under District of Columbia law this Court should dismiss the plaintiffs' federal cause of action. The defendants are correct in their assertion that the broad terms of 18 U.S.C. § 1962 & 1964(c) pose a risk of turning traditional state claims into federal cases. The 91st Congress, however, enacted RICO despite persuasive similar arguments by several Congressmen. See 116 Cong.Rec. 35,205 (remarks of Rep. Mikva); see also United States v. Turkette, 452 U.S. 576, 586-87, 101 S. Ct. 2524, 2530-31, 69 L. Ed. 2d 246 (1981) (Congress intended to enter domains traditionally left to the states in enacting RICO). Moreover, the statute itself declares that Congress intended to supplement other available remedies. See 18 U.S.C. § 1961, note. Accordingly, this Court will not entertain the defendants' federalism policy argument when it is clear that Congress has already made that judgment. Defendants have also asked this Court to dismiss the complaint because other, more specific causes of action are available to plaintiffs. It is beyond dispute, however, that the plaintiff "is master to decide what law he will rely on. . . ." Bell v. Hood, 327 U.S. 678, 681, 66 S. Ct. 773, 775, 90 L. Ed. 939 (1946). A court's discretion in passing on a Rule 12(b)(6) motion to dismiss is limited. See Jenkins v. McKeithen, 395 U.S. 411, 421, 89 S. Ct. 1843, 1848, 23 L. Ed. 2d 404 (1969). This Court's authority does not include the discretion to dismiss a complaint because a plaintiff might have brought suit under a different law in another forum which may result in some form of relief. In addition, the Court notes that defendants' argument concerning the availability of more specific causes of action has uniformly been rejected when raised by criminal defendants in RICO proceedings. Courts have denied defendants' argument when viewed as a dual sovereignty challenge, United States v. Aleman, 609 F.2d 298, 309 (7th Cir.1979), or as a challenge to the government's charging decision under two overlapping federal criminal statutes; see United States v. Computer Sciences, 689 F.2d 1181, 1187 (4th Cir.1982); cf. United States v. Batchelder, 442 U.S. 114, 99 S. Ct. 2198, 60 L. Ed. 2d 755 (1979). Although the considerations relevant to judicial review of the government's charging decisions are not equally applicable between private litigants, this Court's review under a Rule 12(b)(6) motion is limited to whether the complaint states a valid cause of action.
Although the Court cannot grant the defendants' motion to dismiss based on the reasons offered by the defendants, the Court is genuinely concerned about the plaintiffs' compliance with Rule 9(b) of the Federal Rules of Civil Procedure. Rule 9(b) requires that all fraud allegations "shall be stated with particularity." Id. This rule applies with particular force to a civil complaint which alleges fraudulent conduct involving violations of the criminal code. The complaint in this case alleges that the defendants conducted a pattern of racketeering activity, to wit, an alleged scheme to defraud under 18 U.S.C. § 1341 & 1343, "in violation of § 1962." Complaint, para. 10. While U.S.C. § 1964(c) literally speaks only to violations of "section 1962," that does not remove the burden placed on plaintiffs to state a specific type of section 1962 violation. For example, paragraph ten of the complaint refers to a conspiracy but the complaint fails to indicate whether a violation of RICO's conspiracy section, 18 U.S.C. § 1962(d) is being alleged. Within the context of Rule 9(b)'s mandate for specificity, it is essential that plaintiffs identify what particular violation of section 1962 is being alleged. Rule 9(b) also extends to the essential elements of the particular type of racketeering violation that is being alleged. Consequently, the plaintiffs must state with particularity the nature of the "enterprise" alleged as well as the acts constituting the basis for the underlying claims of mail and wire fraud. The Court will dismiss the complaint without prejudice to plaintiffs filing an amended complaint in conformity with Rule 9(b) of the Federal Rules of Civil Procedure. Wherefore, it is this 28th day of July, 1983.
ORDERED that the defendants' motion to dismiss is denied in all respects, and it is
FURTHER ORDERED that the complaint is dismissed without prejudice to the refiling of an amended complaint in conformity with Rule 9(b) of the Federal Rules of Civil Procedure within thirty (30) days from the date of this Order.
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