Summary
The Third Circuit reviewed the dismissal of K. Kay Shearin’s civil RICO claims against several E.F. Hutton entities. The court held that the complaint adequately pleaded RICO violations under 18 U.S.C. § 1962(a), (c), and (d), but that the alleged job losses were not injuries resulting from the § 1962(a) or (c) violations. It held that Shearin’s alleged termination in furtherance of a § 1962(d) conspiracy could constitute a compensable injury under § 1964(c), reversing in part and remanding.
Topics
Practice areas
Questions Presented
- Whether Shearin adequately pleaded violations of 18 U.S.C. § 1962(a), (c), and (d).
- Whether Shearin alleged an injury to her business or property by reason of the alleged § 1962(a) and § 1962(c) violations sufficient to confer standing under 18 U.S.C. § 1964(c).
- Whether alleged termination in furtherance of a § 1962(d) conspiracy constituted an actionable injury under § 1964(c), even though the termination-related acts were not themselves racketeering activity listed in § 1961(1).
Holdings
- The complaint adequately alleged that the defendants received money derived from a pattern of racketeering activity, invested that money in an enterprise, and affected interstate commerce.
- The complaint adequately pleaded the existence of an enterprise affecting interstate commerce, defendants' association with and participation in the enterprise, and a pattern of racketeering activity.
- The complaint adequately pleaded a conspiracy to violate § 1962(a) and § 1962(c) by alleging the conspiracy's time period, object, concerted actions, agreement to commit predicate acts, and knowledge of the alleged racketeering pattern.
- Shearin did not allege an actionable § 1964(c) injury resulting from the alleged § 1962(a) or § 1962(c) violations.
- Alleged termination in furtherance of a § 1962(d) conspiracy states a claim for relief under § 1964(c), even though the hiring and firing acts may not themselves qualify as predicate racketeering activity under § 1961(1).
Key quotations
“We hold, therefore, that the allegation that Shearin was fired in furtherance of a conspiracy in violation of 18 U.S.C. Sec. 1962(d) states a claim for relief under section 1964(c).” (¶ 50)
“The judgment appealed from will to this extent be reversed, but will in other respects be affirmed.” (¶ 51)
Factual background
Shearin was hired by Hutton Trust on April 30, 1984, promoted to vice president in April 1985, and dismissed on March 6, 1986. She alleged that Hutton Group, Hutton Inc., and Hutton Trust created and operated Hutton Trust as a facade to charge customers fees for trust services that were not performed. She further alleged that she was hired as window dressing for the fraudulent enterprise and discharged when she refused to participate in or conceal the defendants' activities from Delaware bank examiners.
Procedural history
Shearin, a former Hutton Trust employee, filed an amended complaint alleging that the defendants violated RICO and that the alleged violations injured her business or property. The district court dismissed the complaint, holding that, even assuming adequately pleaded RICO violations, Shearin lacked standing to seek damages under 18 U.S.C. § 1964(c). The Third Circuit affirmed dismissal as to the alleged § 1962(a) and § 1962(c) violations, but reversed and remanded as to the alleged § 1962(d) conspiracy based on her termination.
Remand instructions
Remand for further proceedings on Shearin's claim that her termination caused injury in furtherance of a conspiracy violating 18 U.S.C. § 1962(d). The judgment remains affirmed as to the alleged § 1962(a) and § 1962(c) violations.