Two excerpts for the (nonexistent) price of one today -- a short introduction to the section on the pace of legal proceedings, and a longer (all right, long) look at RICO (the federal Racketeer Influenced and Corrupt Organizations Act, which now extends far beyond its apparent context).
Here's the first:
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A. Intro: "Abandon All Hope "
Lawsuits are hell. Or would be, if Hell were expensive.
Like Hell, they last forever.
Like Hell, they often end up making you regret whatever you did to get there.
I’ve sometimes thought that every courthouse door should bear the same inscription that greeted those entering Hell in Dante’s Inferno: “Abandon all hope, ye who enter here.”
That’s obviously an unfair and jaundiced view. As I said earlier, the judicial system, with all its faults, is a better way to resolve disputes than, say, mortal combat. Sometimes, justice is done, and done without overwhelming unintended consequences for the parties.
But if an author is going to write about litigation, they should keep in mind the enormous financial, logistical, and emotional burdens involved. And anyone with a choice about whether or not to embark on litigation should think very carefully about that choice.
And the second:
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C. You Too May be Treated Like a Gangster: RICO
It all started with some very frustrated law enforcement folks. They were having a devil of a time getting juries to convict gangsters. Oh, they finally got Al Capone on taxes, but wasn’t there some easier way?
Enter the Racketeer Influenced and Corrupt Organizations Act (RICO), in 1970. RICO was designed to make it easier to convict participants in organized crime by focusing on how organized crime actually functioned, and to nail the kingpins rather than just the small fry actually doing the murder, shakedowns, pimping, drug dealing, etc. It did this by:
>> Focusing on “patterns of racketeering.” This was supposed to mean multiple violations of the sort of laws organized crime might violate in the regular course of business.
>> Including those who initiated the criminal activity, even if they weren’t out on the streets committing violent acts and so forth.
>> Providing for pretrial restraining orders seizing the assets that would otherwise pay for the finest criminal defense teams.
At some point after RICO was passed, and certainly by the 1980s, the feds figured out that RICO could be a handy tool well outside its original context.
Various portions of RICO deal with investing proceeds from a pattern of racketeering in an “enterprise,” or using such proceeds to maintain an interest in the “enterprise,” or conducting the affairs of an “enterprise” through a pattern of racketeering. Most courts require the defendant to be someone or something other than the “enterprise,” though the minority view has been gaining adherents. Where there’s a requirement of two separate participants, that requirement may be satisfied even if there’s only a sole proprietorship involved, if there’s some formal separation between the individual and the business or if the business has employees. Where a corporation is the target, sometimes the corporation is the “enterprise” and its officers or employees are the participants. Where a civil suit is contemplated, this may raise the tactical problem of whether the lawsuit is financially worthwhile, since many courts won’t allow the use of a “respondeat superior” approach (see 14.Q.) to let the plaintiff sue the corporation for its agents’ misdeeds.
So what makes up a “pattern of racketeering activity”? A business (again, potentially including an individual in business as a sole proprietorship) may be accused of violating RICO if it uses the U.S. mail or telephone twice in 10 years for a “predicate act.” A “predicate act” is any of a list of underlying crimes that might not be so serious, if RICO wasn’t available to ratchet them up. Use the mail or the phone at least twice in 10 years for one of these acts, and that’s deemed a pattern of racketeering activity.
What are these predicate acts? There are many, and some are awfully easy to commit. Here are a few examples of some “predicate acts” that may not immediately make you think of gangsters and the like:
>> Selling (or maybe just distributing) a video of a live musical performance without permission.
>> Using income that came from collection of a gambling debt, if the gambling involved violated any federal, state, or local law, in interstate commerce (which includes a whole lot of types of economic activity).
>> Using income from “usury,” charging more interest than some law allows, to acquire any interest (such as corporate shares) in any entity involved in interstate or foreign commerce.
>> Selling goods or services with counterfeit trademarks.
>> Obstruction of justice, of an investigation, or of state or local law enforcement.
>> Making a false statement in a passport application.
>> Interstate transportation of a stolen car or other stolen property.
>> Criminal infringement of a copyright.
>> Violating restrictions on payments to a labor organization.
>> Harboring an illegal immigrant.
>> Conspiracy to participate in any of these (or the many other listed) acts.
Some of these federal crimes may, for a criminal conviction, require proof of some sort of intent — but under RICO, the only elements the prosecution must prove beyond a reasonable doubt, the usual standard for criminal prosecutions, are the “pattern” elements. The underlying crime, the predicate act, need only be proved by only a preponderance of the evidence! (Yes, I find this shocking.)
Also, as already mentioned, under RICO the feds can seize or freeze all the assets of the business involved at the time of indictment, before any proof that the predicate act has been committed. Those assets may be the defendant’s only chance of hiring a sufficiently able and experienced attorney. The pressure to accept a plea bargain can thus be overwhelming.
The penalties for violating RICO include very long prison terms and forfeiture of assets unrelated to the criminal activity.
As mentioned above, RICO also has a civil side, allowing suits in both state and federal court. A successful plaintiff can collect treble (triple) damages (see 30.B.3.). One new twist recently in the news: some spouses of the wealthy, claiming that their spouses have hidden assets, are trying to pull their divorce actions into federal court and use civil RICO. This hasn’t succeeded so far, as far as I know, but stay tuned.
RICO has been used against many organizations unrelated to organized crime, including Catholic dioceses, Major League baseball, companies that hired illegal aliens, and anti-abortion activists who blocked entrances to abortion clinics.
One more day of excerpts, and then the book! -- which, by the way, one can preorder on Amazon and on Barnes & Noble.
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