Commercial Litigation and Arbitration

Twombly and Civil RICO — Reputational Impact of RICO Claim

From Nichols v. Mahoney, 2009 U.S. Dist. LEXIS 34955 (S.D.N.Y. April 2, 2009):

A civil RICO lawsuit has vast implications for the defendants because of the specter of treble damages and the possibility of permanent reputational injury to defendants from the allegation that they are "racketeers." Courts have frequently commented on the "in terrorem" settlement value that a threat of a civil RICO claim creates. See, e.g., Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008); Nakahara v. Bal, 97 Civ. 2027, 1998 WL 35123, at *9 (S.D.N.Y. Jan. 30, 1998). The concerns about the impact of civil antitrust litigation that were articulated by the Supreme Court in Twombly (see above) are equally, if not more so, applicable to civil RICO claims. That should not be surprising, since the civil RICO statute was modeled on the Sherman Act. See Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 457 (2006) (discussing same).

If Twombly means anything, it means that, "Bald assertions and conclusions of law will not suffice. The pleadings must create the possibility of a right to relief that is more than speculative." … Therefore, after Twombly, a plaintiff in a civil RICO lawsuit must plead some facts tending to show that his ultimate conclusion is "plausible." ***

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