Case Summary and Outcome

On January 24, 1994, the United States Supreme Court (the “Court”) held, inter alia, that the Racketeer Influenced and Corrupt Organizations Act chapter of the Organized Crime Control Act of 1970, 18 U. S. C. §§ 1961–1968 (“RICO”) did not require proof that racketeering enterprise or predicated acts of racketeering in § 1962(c) were motivated by an economic purpose. The case concerned allegations by the petitioners (groups who were pro-availability of abortion) of racketeering against the respondents (groups and individuals who were anti-abortion) to curtail the accessibility and availability of abortion and related healthcare services. The respondents, inter alia, argued that the RICO claims curtailed their First Amendment right to protest and chilled their expression.

Although the Court did not determine the allegations of racketeering conduct or First Amendment claims, the Court did determine that racketeering allegations under RICO do not require an economic motivation.

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Facts

The facts concerned a writ petition for certiorari brought forth by several petitioners – including the National Organisation for Women (“NOW”), the Delaware Women’s Health Organization, Inc. (DWHO), and the Summit Women’s Health Organization, Inc. (SWHO) – against respondents, a coalition of antiabortion groups called the Pro-Life Action Network (PLAN), Joseph Scheidler and other individuals and organizations, on grounds of the respondents violating the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. § 1 et seq., and RICO’s §§ 1962(a), (c), and (d), as well as several pendent state-law claims concerning several activities of anti-abortion protestors at the clinics.

The petitioners had sought injunctive relief, along with treble damages, costs, and attorney’s fees. The complaint was later amended to file a “RICO Case Settlement” which further detailed the enterprise, the pattern of racketeering, the victims of the racketeering activity, and the participants involved. It was also alleged that respondents were members of a nationwide conspiracy to shut down abortion clinics through a pattern of racketeering activity.

Amongst other claims, the petitioners alleged that the DWHO and SWHO alleged in their complaint that the respondents conspired to use force to induce clinic staff and patients to stop working and obtain medical services elsewhere. Further, the petitioners claimed that respondent Scheidler threatened DWHO’s clinic administrator with reprisals if she refused to quit her job at the clinic.

The District Court for the Northern District of Illinois (“District Court”) had dismissed the case pursuant to Federal Rule of Civil Procedure 12(b)(6), observing that the petitioners failed to state a claim under § 1962(c) as they failed to allege a profit-generating purpose in the activity or enterprise; it further dismissed their conspiracy claim under § 1962(d), observing that their RICO claims could not stand. Later, the Court of Appeals affirmed with the District Court on issues concerning the RICO claims, observing that the voluntary contributions received by respondents did not constitute income derived from racketeering activities for purposes of § 1962(a). The Court of Appeals also affirmed the dismissal of the conspiracy claim under § 1962(d).

Eventually, the issue reached the United States Supreme Court, which granted the writ of certiorari to resolve a conflict among the Court of Appeals on the putative economic motive requirements of the relevant laws. The Court did not rule on whether the respondents committed the requisite predicate acts and whether the commission of these acts fell into a pattern; these questions were not before the Court.

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Decision Overview

The Supreme Court issued a majority opinion on the question of whether an economic motive must be proven in cases involving racketeering.

Re: Whether the petitioners have the standing to bring their claim

The respondents raised a question on whether the petitioners have a standing to bring their claim. Only DWHO and SWHO (and not NOW) proceeded to sue under the RICO; NOW sought class certification for itself to bring RICO claims as class actions; however, their request was dismissed when the District Court dismissed the case. The respondents accordingly asserted that the complaint alleges no injury to DWHO and SWHO.

The Court observed that the petitioners had a standing to bring their claim. The respondents were incorrect in asserting that the complaint alleges no “injury” to DWHO and SWHO “fairly traceable to the defendant’s allegedly unlawful conduct. Allen v. Wright, 468 U. S. 737, 751 (1984)”. [p. 255] The District Court dismissed the petitioners’ claim at the pleading stage pursuant to Federal Rule of Civil Procedure 12(b)(6); their claim must be sustained if the relief sought could be granted “under any set of facts that could be proved consistent with the allegations. Hishon v. King & Spalding, 467 U. S. 69, 73 (1984).” [p. 256]

 

Re: Whether the racketeering enterprise or the predicate acts must have an economic motive

The Court reproduced the language of the relevant sections:

• Section (a) provides that it “shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity . . . to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.”
• Section 1962(b) states that it “shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.”
• Section 1962(c) makes it 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.”
• Section 1961(1) defines a “pattern of racketeering activity” to include conduct that is “chargeable” or “indictable” under a host of state and federal laws. RICO broadly defines “enterprise” in § 1961(4) to “includ[e] any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.”

The Court observed that the language of the law does not indicate a requirement of an economic motive. The phrase “any enterprise engaged in, or the activities of which affect, interstate or foreign commerce” comes close to an indication of a requirement of an economic motive; however, the use of the term “affect”, as per Webster’s Third New International Dictionary 35 (1969), is defined as “to have a detrimental influence on – used especially in the phrase affecting commerce” and so the enterprise need not necessarily have its own profit-seeking motive.

The usage of term “enterprise” in the relevant laws – subsections (a) and (b) – does not lead to an inference that an economic motive is required in subsection (c). The Court clarified that the term “enterprise” in subsections (a) and (b) – plays a different role in the structure of those subsections than it does in subsection (c). The “enterprise” in subsections (a) and (b) speak towards something which is acquired through the use of illegal activities or by money obtained from illegal activities. “The enterprise in these subsections is the victim of unlawful activity and may very well be a “profit-seeking” entity that represents a property interest and may be acquired. But the statutory language in subsections (a) and (b) does not mandate that the enterprise be a “profit-seeking” entity; it simply requires that the enterprise be an entity that was acquired through illegal activity or the money generated from illegal activity.” [p. 259]

The “enterprise” in subsection (c) connotes a vehicle through which the unlawful pattern of racketeering is committed, and not the victim of racketeering. It is not being acquired, and need not have a property interest that can be acquired, nor an economic motive for engaging in illegal activity; “it need only be an association in fact that engages in a pattern of racketeering activity.” [p. 259]

Thus, the Court differed with the opinion of the Court of Appeals, which pronounced that the claim required an economic motive. The Court of Appeals relied on the reasoning of United States v. Bagaric, 706 F. 2d 42 (CA2), cert. denied, 464 U. S. 840 (1983), to support its conclusion that subsection (c) requires an economic motive, where the court had relied in part on the congressional statement of findings which prefaces RICO and refers to the activities of groups that “‘drai[n] billions of dollars from America’s economy by unlawful conduct and the illegal use of force, fraud, and corruption.’” [p. 260]

Objecting, the Court remarked that the Court of Appeals overlooked the fact that predicate acts like the alleged extortion may not benefit the protestors financially but “still may drain money from the economy by harming businesses such as the clinics which are petitioners in this case.” [p. 260] Further, it noted that the congressional findings on which the Courts of Appeals relied primarily on Bugaric, is a “thin reed upon which to base a requirement of economic motive neither expressed nor…fairly implied in the operative sections of the Act.” [p. 260]

Drawing parallels to the present case, the Court recalled the case of H. J. Inc. v. Northwestern Bell Telephone Co., 492 U. S. 229, 248 (1989), to note that though the Congress’ action was to combat organized crime, a more general statue was enacted by the Congress which is not limited to organised crime. Further, the Court noted that in United States v. Turkette, 452 U. S. 576 (1981), the court was concerned with the issue of whether “enterprise” as used in § 1961(4) should be confined to “legitimate” enterprises. There, the court had determined that “[t]here is no restriction upon the associations embraced by the definition: an enterprise includes any union or group of individuals associated in fact” [p. 260], and so enterprise includes both – legitimate and illegitimate enterprises. The Court remarked that in that particular case, it was noted that Congress could have easily narrowed the sweep of the term “enterprise” to mean only legitimate enterprises; however, Congress consciously did not do so.

Furthermore, the Court also remarked that the guidelines for RICO prosecutions issued by the Department of Justice in 1981, which provided for an economic motive for enterprises (guidelines, which the Court of Appeals relied on), were later amended in 1984 by the Department of Justice to provide that an association-in-fact enterprise must be “directed toward an economic or other identifiable goal.”

Finally, the Court also considered the respondents’ arguments which contended that the rule of lenity should control the result here in criminal cases. Countering such an argument, the Court maintained that the rule of lenity is to be applied in cases where there is an ambiguity present, which is not the case in the present matter. Relying on relevant jurisprudence, the Court noted that the application of RICO to cases not anticipated by Congress does not point towards ambiguity but rather is demonstrative of its breadth.

The Court did not rule on whether the respondents committed the requisite predicate acts and whether the commission of these acts fell into a pattern; these questions were not before the Court.

 

Concurring opinion

Justices Souter and Kennedy concurred with the majority opinion.

The opinion noted that even if RICO were open to debate, it would not follow that the statute ought to be read to include an economic-motive requirement, as it “would correspond only poorly to free-speech concerns. Respondents and amici complain that, unless so limited, the statute permits an ideological organization’s opponents to label its vigorous expression as RICO predicate acts, thereby availing themselves of powerful remedial provisions that could destroy the organization. But an economic-motive requirement would protect too much with respect to First Amendment interests since it would keep RICO from reaching ideological entities whose members commit acts of violence we need not fear chilling. An economic-motive requirement might also prove to be under-protective, in that entities engaging in vigorous but fully protected expression might fail the proposed economic-motive test (for even protest movements need money) and so be left exposed to harassing RICO suits.” [p. 263-264]

An economic-motive requirement is unnecessary since legitimate free speech cases may be raised and addressed case-by-case in RICO issues. A RICO defendant is not precluded from raising the First Amendment for its defense. Further, even where a RICO violation has been made, the First Amendment may limit the relief that can be granted against an organization otherwise engaging in protected expression.

The opinion lastly noted that it does not express any view on the possibility of a First Amendment claim by the respondents; however, it cautioned courts to bear First Amendment implications in mind when determining RICO cases.

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