constitute the requisite "pattern of racketeering activity"; and (3) the injury alleged by plaintiff is not cognizable under RICO.
Each defect is dealt with separately. This court notes at the outset that defendants' motions to dismiss are not considered Rule 56 summary judgment motions just because defendant DCI attached two letters to its motion. Those letters are not significant in resolving the issues at bar and consequently this court, pursuant to Rule 12(b), chooses to exclude them from consideration.
A. No Separate and Distinct "Enterprise "
RICO section 1962 prohibits "persons" (those alleged to have violated the act) from utilizing an "enterprise" for racketeering purposes. "Enterprise" is defined to include "any individual, partnership, corporation, association or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961(4). Any statutory interpretation of section 1962 must recognize that the "person" under RICO is a different entity from the "enterprise".
The case law in this circuit supports this. In Guerrero v. Katzen, 571 F. Supp 714, 722 (D.D.C. 1983), this court dismissed Section 1962 allegations both because there was no clear distinction between the "persons" and the "enterprise" and because no valid causal connection was pled between the RICO offense and plaintiffs' injury. In that case, plaintiffs alleged that two defendants were the "persons," but that together or individually they were also the "enterprise."
In Yellow Bus Lines, Inc. v. Drivers, Chauffeurs & Helpers Local Union 639, No. 83-1232, slip. op. at 6-11 (D.D.C. June 28, 1984) (Flannery, J.), this court dismissed certain § 1962 allegations because the defendant union could constitute a "enterprise", but could not constitute a "person" as well. The court found that the union could be a "person" if it engaged in racketeering to aid some outside organization or "enterprise", but that the union could not simultaneously be considered a "person" and "enterprise". Id. at 8-9.
This interpretation has been recognized in other circuits as well. Bennett v. United States Trust Company of New York, 770 F.2d 308, 314-15 (2d Cir. 1985); B.F. Hirsch v. Enright Refining Co., 751 F.2d 628, 634 (3d Cir. 1984); Haroco, Inc. v. American National Bank & Trust Co., 747 F.2d 384, 400 (7th Cir. 1984), aff'd on other grounds, 473 U.S. 606, 105 S. Ct. 3291, 87 L. Ed. 2d 437 (1985) (per curiam); Rae v. Union Bank, 725 F.2d 478, 481 (9th Cir. 1984); United States v. Computer Sciences Corp., 689 F.2d 1181, 1190-91 (4th Cir. 1982), cert. denied, 459 U.S. 1105, 103 S. Ct. 729, 74 L. Ed. 2d 953 (1983); Bennett v. Berg, 685 F.2d 1053, 1061-62 (8th Cir. 1982), aff'd en banc, 710 F.2d 1361, cert. denied, 464 U.S. 1008, 104 S. Ct. 527, 78 L. Ed. 2d 710 (1983); Kaufman v. Chase Manhattan Bank, N.A., 581 F. Supp. 350, 357-58 (S.D.N.Y. 1984). The only case which supports plaintiff's position is United States v. Hartley, 678 F.2d 961, 987-90 (11th Cir. 1982), cert. denied, 459 U.S. 1170, 74 L. Ed. 2d 1014, 103 S. Ct. 815 (1973). This court is not persuaded by the reasoning of Hartley and instead adheres to the majority rule.
Since they are the entities being sued, the three defendants here must be the RICO "persons." In the complaint, plaintiff suggests that the "enterprise" is either these persons altogether or individually, or the "enterprise" may be some grouping of defendants as a group along with certain officers of defendants TCI and DCI. Only later, in its pleadings, does plaintiff suggest that the "enterprise" consists of defendants, defendants' officers, C&P Telephone Company, and United Cable Company.
Such vague and unclear allegations are unacceptable for stating a RICO claim upon which relief may be granted. The corporate defendants individually cannot be "enterprises" since they would be identical to the "persons." A group of corporations, Fustok v. Conticommodity Services, Inc. et al., No. 82-1538, slip. op. at 4 (S.D.N.Y Sept. 24, 1985) (Lasker, D.J.), or a corporation in association with its officers, Sedima, S.P.R.L. v. Imrex, Co., 473 U.S. 479, 105 S. Ct. 3275, 87 L. Ed. 2d 346 (1985), may form an enterprise for the purpose of perpetrating fraudulent transactions, but the only connection among the corporate defendants in this case, and between them and C&P Telephone Company or United Cable Company, is in the single alleged attempt to defraud the District of Columbia. The Supreme Court has stated that the enterprise must have an existence apart from the acts of racketeering. United States v. Turkette, 452 U.S. 576, 101 S. Ct. 2524, 69 L. Ed. 2d 246 (1981). To determine what constitutes an "existence apart" the Eighth Circuit has developed a useful set of criteria for determining the enterprise. United States v. Lemm, 680 F.2d 1193, 1198 (8th Cir. 1982); United States v. Bledsoe, 674 F.2d 647, 665 (8th Cir. 1982) (an "enterprise" must exhibit three basic characteristics: (1) common or shared purpose; (2) some continuity of structure and personnel; and (3) an ascertainable structure distinct from that inherent in the conduct of a pattern of racketeering). This court finds that on the facts alleged in the complaint, there is no ascertainable structure of the "enterprise" that is distinct from that inherent in the conduct of the alleged pattern of racketeering activity. As defendants point out, the only apparent common denominator among the three defendants as an ongoing "enterprise" is their involvement in the particular transaction which is the subject of this suit.
B. No "Pattern of Racketeering Activity "
RICO section 1962 proscribes participation in the enterprise "through a pattern of racketeering activity." Such activity requires at least two acts of racketeering activity. 18 U.S.C. § 1961(5). A racketeering activity is any act indictable under certain state and federal criminal laws. 18 U.S.C. § 1961(1).
There is no doubt that Congress intended RICO to be "liberally construed to effectuate its remedial purposes," Pub.L. 91-452, § 904(a), 84 Stat. 947, and the Supreme Court has recognized an expansive interpretation in the case of RICO civil actions. See generally Sedima, supra (in a civil action, there is no requirement that the defendant already be convicted of a predicate act or of a RICO violation, nor that there be a "racketeering injury" as opposed to an injury resulting from the predicate acts themselves). Yet the parameters of what is meant by "pattern" remain unclear. Even an expansive interpretation of "pattern" could not include two isolated acts of racketeering activity. Sedima, supra, at 3285.
Some courts have suggested an interpretation that includes all but two isolated acts. Plaintiff points to R.A.G.S. Couture, Inc. v. Hyatt, et al., 774 F.2d 1350 (5th Cir. 1985) (Wisdom, C.J.), where the court found that the mailing of fraudulent invoices by defendants to plaintiff and then the remailing of the invoices by defendants' counsel, constitutes two related acts of racketeering activity which could be a "pattern" under RICO.
The facts of this case are somewhat different. Defendant alleges four discrete mailings of single documents, as opposed to the two mailings of numerous invoices found in R.A.G.S. Defendants TCI and TDC were involved in only one of these mailings. The mailings in this case were not made to defendant; in R.A.G.S. they were. Like in R.A.G.S., the mailings here are all related to the alleged scheme to defraud the District of Columbia, but the "activity" is more in the nature of a single effort to defraud, not a series of efforts to defraud by collecting numerous fictional debts.
In explaining the RICO legislation, the Senate report stated:
The infiltration of legitimate business normally requires more than one "racketeering activity" and the threat of continuing activity to be effective. It is this factor of continuity plus relationship which combines to produce a pattern.