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LONG DISTANCE SERV. OF WASHINGTON v. MCI TELCOMS.

April 5, 1988

LONG DISTANCE SERVICE OF WASHINGTON, INC., Plaintiff
v.
MCI TELECOMMUNICATIONS CORPORATION, Defendant


Thomas F. Hogan, United States District Judge.


The opinion of the court was delivered by: HOGAN

THOMAS F. HOGAN, UNITED STATES DISTRICT JUDGE.

 Plaintiff Long Distance Service of Washington, Inc., is suing another long distance telephone service business under several common law theories and the federal Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968 (1982). Plaintiff has abandoned its claim of diversity jurisdiction and relies solely on the RICO Act for federal jurisdiction. Plaintiff's Opposition (Opp.) at 1. Defendant MCI Telecommunications Corporation has moved the Court to dismiss the RICO count for failure to state a claim upon which relief can be granted, Fed. R. Civ. P. 12(b)(6), and to decline to exercise pendent jurisdiction over the remaining state-law claims. Upon consideration of the motion to dismiss filed by defendant, plaintiff's opposition, and the reply thereto, and having given plaintiff an opportunity to amend the complaint in light of recent decisions, the Court shall grant the defendant's motion and dismiss the complaint without prejudice.

 I. Background

 Plaintiff, a Delaware corporation, provides long distance service to customers in Washington, D.C., Virginia, and Maryland. This dispute arises from a contract signed on June 10, 1985, for plaintiff to receive services from Satellite Business Services (SBS). *fn1" SBS agreed to provide plaintiff with "partitioned switch service," a system where plaintiff would use a leased "interexchange carrier" switch. The local telephone company then routes long distance telephone calls from plaintiff's customers to the leased interexchange carrier switch for handling. In addition to allowing plaintiff to use the interexchange carrier switch, SBS was responsible for properly loading the telephone number or automatic number identification of each of plaintiff's customers into the telephone system to enable the customer to call long distance.

 On March 1, 1986, MCI Communications Corporation, the parent company of defendant, *fn2" merged with or acquired SBS, which up to that point had been owned by International Business Machines Corporation (IBM). Plaintiff's difficulties, as recounted in the complaint, began shortly after MCI took over responsibility for providing partitioned switch service to plaintiff. Those difficulties were several, and are recited in plaintiff's claims for breach of contract, negligence, fraud, tortious interference with contractual relationships, and unfair trade competition.

 The sole basis of federal jurisdiction is the count alleging a RICO Act violation, 18 U.S.C. § 1962(c). The complaint alleges that defendant's employees devised numerous schemes to defraud plaintiff and mislead plaintiff's customers. The complaint alleges that defendant misappropriated at least six customers of plaintiff, and is attempting to misappropriate others, through acts of mail fraud and wire fraud. According to the complaint, the misappropriation occurred when defendant contacted plaintiff's customers and informed them that the customer now had to use an MCI code to dial long distance and when defendant falsely claimed that certain customers had chosen MCI when they had in fact chosen plaintiff.

 II. Discussion

 RICO seeks to inhibit "racketeering activity" defined as, inter alia, "any act which is indictable under any of the following provisions of title 18, United States Code: . . . section 1341 (relating to mail fraud), [and] section 1343 (relating to wire fraud)." 18 U.S.C. § 1961(1)(B). Plaintiff seeks to rely to that part of RICO providing that any person may recover treble damages and attorneys fees if "injured in his business or property by reason of a violation of section 1962 of this chapter." 18 U.S.C. § 1964(c). Section 1962 defines those acts prohibited by the Act for which damages may be obtained. Plaintiff founds its claim on section 1962(c):

 
It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.

 18 U.S.C. § 1962(c). Thus, in order to plead a section 1962(c) violation, a plaintiff must allege at least four elements: 1) conduct 2) of an enterprise 3) through a pattern 4) of racketeering activity. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 87 L. Ed. 2d 346, 105 S. Ct. 3275 (1985).

 Defendant claims plaintiff's RICO pleading is fatally defective in several respects. The Court agrees that the complaint fails to satisfy the requirement of nonidentity of the person and enterprise and fails to allege a legally sufficient pattern of racketeering activity.

 A. Nonidentity of Enterprise and Person

 Most courts, including the D.C. Circuit, have construed the phrase "any person employed by or associated with any enterprise" to require that the "person" who engages in racketeering activity be separate from the "enterprise" with which it interacts. Yellow Bus Lines, Inc. v. Drivers, Chauffeurs & Helpers Local Union 639, 268 U.S. App. D.C. 103, 839 F.2d 782 slip op. at 789-92 (D.C. Cir. 1988); Bishop v. Corbitt Marine Ways, Inc., 802 F.2d 122, 123 (5th Cir. 1986); B.F. Hirsch v. Enright Refining Co., 751 F.2d 628, 633-34 (3d Cir. 1984); Haroco, Inc. v. American National Bank & Trust Co., 747 F.2d 384, 401-02 (7th Cir. 1984), aff'd on other grounds, 473 U.S. 606, 87 L. Ed. 2d 437, 105 S. Ct. 3291 (1985); Rae v. Union Bank, 725 F.2d 478, 480-81 (9th Cir. 1984); United States v. Computer Sciences Corp., 689 F.2d 1181, 1190 (4th Cir. 1982), cert. denied, 459 U.S. 1105, 74 L. Ed. 2d ...


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