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.
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).
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,
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.
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 953, 103 S. Ct. 729 (1983). Thus, to maintain a RICO claim, the alleged "person" cannot be the same as the alleged "enterprise," and, in the case of a corporation, the corporation may not be both the enterprise and the person.
Plaintiff, in papers filed before Yellow School Bus was decided, did not attempt to satisfy the nonidentity requirement but simply urged the Court to reject the requirement. Opp. at 2-6. The Eleventh Circuit stands alone in rejecting the requirement, see U.S. v. Hartley, 678 F.2d 961 (1982). The Court, of course, is constrained to follow Yellow School Bus. Notwithstanding that recent development, however, the Court is not persuaded by the reasoning of Hartley and instead would join the majority view that section 1962(c) was intended to punish the person who conducts the affairs of an otherwise legitimate business in an illegal manner. The victimized business, therefore, cannot be that "person." The Court agrees with the First Circuit that "it stretches the language too far to suggest that a corporation can be employed by or associated with itself." Schofield v. First Commodity Corp., 793 F.2d at 31 (1st Cir. 1986).
On February 24, 1988, plaintiff moved the Court to hold defendant's motion to dismiss in abeyance until March 28, 1988, so plaintiff's counsel could reevaluate the case in light of the post-complaint decision in Yellow Bus Lines. The Court granted the motion, but plaintiff's counsel has taken no action and the requested time has elapsed.
B. Pattern of Racketeering Activity
A "pattern of racketeering activity" is defined as "at least two acts of racketeering activity . . . the last of which occurred within 10 years . . . after the commission of a prior act of racketeering activity." 18 U.S.C. § 1961(5).
The circuits have split on the requirements for demonstrating a pattern of racketeering. Compare Superior Oil Co. v. Fulmer, 785 F.2d 252, 257 (8th Cir. 1986) (more than one criminal scheme necessary) with Bank of America National Trust & Savings Association v. Touche Ross & Co., 782 F.2d 966, 971 (11th Cir. 1986) (one scheme enough).
The D.C. Circuit has not addressed the division of authority directly. However, the D.C. Circuit recently held that five predicate acts of threats against property or persons in a labor dispute satisfied the pattern requirement. Yellow Bus Lines, 839 F.2d at 788-89, slip op. at 11. The court relied on the definition of "pattern" provided in 18 U.S.C. § 3575(e) (1982):
criminal conduct forms a pattern if it embraces criminal acts that have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.