Summary
The Supreme Court held that a private civil action under RICO's treble-damages provision does not require a prior criminal conviction of the defendant. The Court also rejected a separate "racketeering injury" requirement, concluding that a plaintiff may recover for injury to business or property caused by predicate acts constituting a RICO violation. The judgment of the Second Circuit was reversed and the case remanded.
Topics
Practice areas
Questions Presented
- Whether a private civil RICO action under 18 U.S.C. § 1964(c) requires the defendant to have been previously convicted of the predicate criminal acts or of a RICO violation.
- Whether a private civil RICO plaintiff must allege a distinct racketeering injury or an injury different from the direct financial harm caused by the predicate acts.
- Whether Sedima's complaint stated a civil RICO claim notwithstanding its failure to allege prior convictions or a separate racketeering injury.
Holdings
- A private civil RICO action under 18 U.S.C. § 1964(c) does not require a prior criminal conviction for the predicate acts or for a RICO violation.
- A civil RICO plaintiff need not allege a distinct "racketeering injury" separate from the injury caused by the predicate acts.
Key quotations
“There is no room in the statutory language for an additional, amorphous “racketeering injury” requirement.” (495)
“But the statute requires no more than this.” (497)
“We nonetheless recognize that, in its private civil version, RICO is evolving into something quite different from the original conception of its enactors.” (500)
Factual background
Sedima, a Belgian corporation, entered into a joint venture with Imrex to supply electronic components to a Belgian buyer. Imrex filled approximately $8 million in orders but allegedly submitted inflated bills and collected for nonexistent expenses, depriving Sedima of its share of the proceeds. Sedima sought at least $175,000 in damages and asserted civil RICO claims based on alleged mail and wire fraud, along with common-law claims.
Procedural history
Sedima sued Imrex and two officers in the Eastern District of New York, asserting common-law claims and civil RICO claims based on alleged mail and wire fraud. The District Court dismissed the RICO counts for failure to allege a distinct racketeering or competitive injury. The Second Circuit affirmed, additionally holding that a civil RICO plaintiff must allege prior criminal convictions for the predicate acts or a RICO violation. The Supreme Court granted certiorari, rejected both limitations, reversed, and remanded.
Remand instructions
Remanded for further proceedings consistent with the opinion. The lower courts were not to dismiss the RICO claims solely because the complaint lacked a distinct racketeering injury or because the defendants had not previously been convicted.