3. Legal capacity to be sued
The Dubai Defendants argue that both Stock Holding Company and Sheikh Rashid lack the legal capacity to be sued. They contend that Stock Holding Company, a Luxembourg corporation, merged with Crescent Holding Company and lost its independent capacity to sue and be sued. Similarly, they argue that since there is no designated legal representative or formal probate upon the death of a Ruler of Dubai, the suit against the late Sheikh Rashid must be dismissed. While the Dubai Defendants' assertions may turn out to be accurate, the plaintiffs have alleged sufficient facts to survive the motion to dismiss; the plaintiffs will be entitled to engage in discovery to confirm the identity of, or identify, those entities or persons who have assumed the legal obligations of Stock Holding Company and Sheikh Rashid.
See Estate of Rosenberg by Rosenberg v. Crandell, 56 F.3d 35, 37 (8th Cir. 1995); Swartz v. Gold Dust Casino, Inc., 91 F.R.D. 543, 546 (D.Nev. 1981); Saffron v. Wilson, 70 F.R.D. 51, 56 (D.D.C. 1975).
4. Whether RICO claims survive a defendant's death
Relying principally upon Genty v. Resolution Trust Corp., 937 F.2d 899, 912-13 (3d Cir. 1991), the defendants argue that the RICO count against Sheikh Rashid's estate must be dismissed, because it is punitive in nature. The plaintiffs counter that the Dubai Defendants have ignored the Supreme Court's holding that RICO's legislative history "reveals the . . . emphasis on the remedial role of the treble-damages provision," Shearson/American Express, Inc., v. McMahon, 482 U.S. 220, 240, 96 L. Ed. 2d 185, 107 S. Ct. 2332 (1987), and that the only federal appellate court to have been presented with a similar issue has held that RICO claims survive a plaintiff's death, because the "primary purpose" of RICO is remedial. Plaintiffs' Opposition, at 38 (citing Faircloth v. Finesod, 938 F.2d 513, 518 (4th Cir. 1991)). The plaintiffs also point out that numerous district courts "have concluded that a civil RICO suit is remedial, not penal, and accordingly survives the death of a party." Id. (quoting United States v. Private Sanitation Indus. Assoc. of Nassau/Suffolk, 159 F.R.D. 389, 390 (E.D.N.Y. 1994) (collecting cases)).
Recognizing the split of authority on the question, compare Confederation Life Ins. Co. v. Goodman, 842 F. Supp. 836, 838 (E.D. Pa. 1994) with County of Oakland v. Detroit, 784 F. Supp. 1275, 1285 (E.D. Mich. 1992), the Court is persuaded that a civil RICO suit survives the death of a defendant. Although the treble damages provisions of a civil RICO suit may suggest a punitive element, the overriding purpose of RICO is to provide a remedy to persons injured as a result of racketeering activity. E.g., McMahon, 482 U.S. at 240; Faircloth, 938 F.2d at 518. The statute itself illustrates Congress's general intent: "the provisions of this title shall be liberally construed to effectuate its remedial purpose." Pub. L. No. 91-452, § 904(a), Title IX, 84 Stat. 947, reprinted in 18 U.S.C.A. § 1961 note (emphasis added). Significantly, civil RICO recovery runs to a private individual, and the mere inclusion of treble damages within a statutory scheme does not operate to make it punitive. See Mitsubishi Motors v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 635, 87 L. Ed. 2d 444, 105 S. Ct. 3346 (1985) (purpose of treble damages provisions in Clayton Act is primarily compensatory).
The principal case upon which the defendants rely is neither controlling nor persuasive. While the Genty court concluded that the treble damages provisions of RICO were punitive in a case involving potential municipal liability where actual damages were easily calculated, 937 F.2d at 913, it is not persuasive authority for the broad proposition that all RICO claims are punitive in nature, even where, as here, the actual damages arising from a specific defendant's actions may be difficult to assess.
Consequently, this Court joins those courts that have concluded that a civil RICO suit survives the death of the defendant. See, e.g., Private Sanitation Indus. Assoc., 159 F.R.D. at 390; County of Oakland, 784 F. Supp. at 1285; In re National Mortgage Equity Corp. Mortgage Pool Cert. Sec. Lit., 636 F. Supp. 1138, 1154 (C.D. Cal. 1986); State Farm Fire & Cas. v. Estate of Caton, 540 F. Supp. 673 (N.D. Ill. 1982).
5. Statute of limitations
Defendants next claim that this action is barred by the applicable statute of limitations. For the same reasons stated previously, the Dubai Defendants' argument will be rejected. See Mem. Op. at 23-26.
6. The common law counts
The Dubai Defendants assert substantially the same challenges to the common law counts that the Court addressed previously and, with one exception, were found to be without merit. See Mem. Op. at 32. As stated before, Count III adequately asserts a claim for fraud against all defendants because the knowledge of the defendants will not be imputed to First American. Moreover, the substantial allegations in the Complaint simply cannot be said to violate Fed. R. Civ. P. 9(b)'s requirement that fraud claims be pleaded with specificity. Count VI sufficiently states a claim of aiding and abetting in breach of fiduciary duties, because it alleges that all of the defendants, including the Dubai Defendants, aided Clifford and Altman, who had a fiduciary duty to First American as an entity. Clifford and Altman are alleged to have engaged in illegal activities, and it is irrelevant that many of the shareholders may have ratified their illegal actions. See Safety Int'l, Inc. v. Dyer, 775 F.2d 660, 662 (5th Cir. 1985); Sellers v. Head, 261 Ala. 212, 73 So. 2d 747, 750 (Ala. 1954). The plaintiffs' claim in Count VIII that the Dubai Defendants engaged in reckless and negligent misconduct will be dismissed because there is no allegation that these defendants owed a duty of care to the plaintiffs. Finally, Count IX states a claim for civil conspiracy because actionable torts have been alleged.
D. The Motion for Reconsideration of Magistrate Judge Attridge's Ruling
Defendants Clifford and Altman request reconsideration by this Court of Magistrate Judge Attridge's order denying their motion for a protective order to stay foreign depositions pending a ruling on the Motion for Reconsideration addressed supra, at 9-13. Because this Court has reconsidered and rejected herein their Motion for Reconsideration, the motion to reconsider Magistrate Judge Attridge's order will be denied as moot.
For the reasons expressed above, it is hereby
ORDERED that Defendant Clifford's and Altman's Motion for Reconsideration of this Court's August 25, 1995 Memorandum Opinion and Order or, in the Alternative, for Certification Pursuant to 28 U.S.C. § 1292(b) is denied; it is
FURTHER ORDERED that the motions to dismiss by the contribution and indemnification codefendants are granted. Defendants Clifford's and Altman's cross-claims and third party complaint are dismissed; it is
FURTHER ORDERED that the Motion of the Dubai Defendants is granted in part and denied in part. Count VIII is dismissed; it is
FURTHER ORDERED that Defendants Clifford's and Altman's Motion for Reconsideration of Magistrate Judge Attridge's Order Denying a Protective Order is denied as moot; and it is
FURTHER ORDERED that discovery shall close on October 31, 1997. By separate order issued this date, this case has been consolidated with Clifford v. First American, Civ. A. No. 95-0877 (JHG) (D.D.C.), for the purposes of discovery.
IT IS SO ORDERED.
November 26, 1996
JOYCE HENS GREEN
United States District Judge