THE SILLINESS OF NAMING THE SAME GROUP AS A RICO PERSON AND ENTERPRISE

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Section 1962(c), the go-to vehicle for any civil RICO case, makes it illegal for a “person” (defendant) to “participate… in the affairs of an enterprise… through a pattern of racketeering activity.” Those words plainly demand the existence of both a person and an enterprise. So a plaintiff cannot allege X violated the section by participating in X’s affairs. In that example X is participating in its own affairs. The Supreme Court acknowledged this in Cedric Kushner v. King in 2001 in a short 9-0 opinion. Confusion about this continues because the actual holding of that decision was that the plaintiff, Don King, a famous boxing promoter, was participating in the affairs of a distinct entity, his own promotion company, even though he was the sole owner. The Court held the corporation was something different from King, a person. There was not a big difference, since the company was so small, and he ran it alone, but it was enough. But in the decision the Court acknowledged the separateness requirement. So it did not pass on the X participating in X affairs hypothetical.

Why is it that so many inexperienced lawyers bringing RICO cases allege that a group of persons, usually people and the corporations they own, are participating in an enterprise which is the very same group? There is not even the pretense of a difference as there was by the incorporation of King’s tiny boxing promotion business. They are not different groupings, and any experienced judge should see that immediately.

If a plaintiff wants to make a serious argument that a group can coalesce and be something different from the sum of its parts, then it should have to show how in the Complaint. I can think of no example which would illustrate this, but people keep trying to fit the square peg in the round hole. If it were so easy to say X is different from X and is participating in the affairs of a distinct entity, then the enterprise element would be meaningless. Any conspiracy would automatically be an enterprise. Federal courts have nixed that possibility when dealing with groups of commonly owned corporations, usually a parent and subsidiaries. If they cannot constitute a RICO enterprise, then how can any group of persons be a distinct enterprise from the smme grouping when they are also the persons? It seems absurd, but that absurdity may answer the question as to why there are no appellate decisions addressing this, just scattered district court decisions. It’s almost too silly to make the argument seriously to an appeals court. Yet it keeps getting made by amateurs all over the country.