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DISTRICT TELCOMS. DEV. CORP. v. DISTRICT CABLEVISI

November 27, 1985

DISTRICT TELECOMMUNICATIONS DEVELOPMENT CORPORATION, Plaintiff,
v.
DISTRICT CABLEVISION, INC., et al., Defendants


Thomas A. Flannery, United States District Judge.


The opinion of the court was delivered by: FLANNERY

THOMAS A. FLANNERY, United States District Judge

MEMORANDUM

 This matter comes before the court on defendants' motions to dismiss plaintiff's complaint. For the reasons stated below, defendants' motions are granted.

 I. Background

 On September 11, 1985, plaintiff District Telecommunications Development Corporation ("District Telecommunications") (a D.C. corporation) filed a complaint seeking more than $13,000,000 in lost profits and other compensatory damages allegedly caused by three defendants, District Cablevision Inc. ("DCI") (a D.C. corporation), Tele-Communications Inc. ("TCI") (a Delaware corporation engaged in the business of acquiring financial interests in and managing cable television systems throughout the United States), and TCI Development Corporation ("TDC") (a Colorado corporation which is a wholly-owned subsidiary of TCI).

 Specifically, plaintiff alleges that defendants employed misrepresentations, and mail and wire fraud, to obtain the exclusive franchise to provide a cable television system to the District of Columbia. Plaintiff claims that but for this fraud, plaintiff would have been awarded the franchise. In addition to actual compensatory damages, plaintiff seeks punitive damages, treble damages, reasonable costs, and attorneys' fees.

 The jurisdiction of this court arises under the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. §§ 1961-68 (1982) (as amended 1984). There are also state law claims which may be joined pursuant to this court's pendent jurisdiction.

 In 1983, the District of Columbia invited proposals for the purpose of awarding a franchise to construct and operate a cable television system in the District. Plaintiff, defendant DCI, and a third company - Capital City Cable - responded. According to plaintiff, DCI then committed numerous fraudulent acts which deceived the District of Columbia concerning the relative merits, technical aspects and financial viability of DCI's proposal. After the bids were considered, plaintiff received an overall ranking of "second-best" qualified, but DCI was awarded the franchise.

 On June 18, 1985, DCI advised the District of Columbia that DCI was unable to fulfill its obligations under the franchise agreement and that modifications were necessary. Plaintiff claims this created an entirely new franchise agreement which, had it been originally presented to the District of Columbia, would not have been accepted.

 Plaintiff's complaint alleges unfair competition, intentional interference with prospective contract, fraud, civil conspiracy to defraud, and violation of RICO sections 1962 and 1964. In the complaint, the RICO allegations are: (1) that the three defendants along with certain officers, directors, and employees of defendants constitute an enterprise or enterprises; (2) that defendants participated in the affairs of such enterprises; (3) that defendants conspired to participate in the affairs of the enterprises so that DCI would obtain the franchise; (4) that interstate mails on at least four occasions and interstate wires were used in furtherance of the fraud; and (5) that this racketeering activity damaged plaintiff in its business and property through lost profits.

 II. Discussion

 RICO section 1962 established a threefold prohibition aimed at stopping the infiltration of racketeers into legitimate organizations. Subsection (a) makes it unlawful for any person who has received income from a pattern of racketeering activity to use the income for the establishment of an enterprise engaged in interstate commerce. Subsection (b) makes it unlawful for any person through a pattern of racketeering activity to acquire an interest in such an enterprise. Subsection (c) reads:

 
It shall be unlawful for any person employed by or associated with any enterprise . . . to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity. . . .

 RICO section 1964 provides civil remedies for anyone injured through violation of section 1962. In pertinent part, 18 U.S.C. § 1964(c) reads:

 
Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and ...

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