Commercial Litigation and Arbitration

Lawyer Providing Conventional Legal Advice Does Not Violate RICO — Non-Moving Defendants Standing in the Same Posture as Moving Defendants May Be Dismissed on Court’s Initiative

From Melton v. Blankenship, 2009 U.S. App. LEXIS 686 (6th Cir. Jan 13, 2009):

Plaintiffs filed a civil RICO claim against defendants, arguing that defendants conspired against them in a previous suit by maliciously filing a counterclaim that lacked a factual basis. Because we conclude that the remedy for this alleged injury lies in state law claims of malicious prosecution and abuse of process, and because neither of these acts are RICO predicates, we affirm the district court's judgment dismissing all claims as to all defendants.


The court in Handeen [v. Lemaire, 112 F.3d 1339 (8th Cir. 1997)] was careful to note that it would be "extremely difficult to fathom any scenario in which an attorney might expose himself to RICO liability by offering conventional advice to a client or performing ordinary legal tasks (that is, by acting like an attorney)." Id. at 1349. The Eighth Circuit distinguished between criminal enterprises and the attorneys who represent them, holding that "[f]urnishing a client with ordinary professional assistance, even when the client happens to be a RICO enterprise, will not normally rise to the level of participation sufficient" to establish RICO liability. Id. at 1348. In the instant case, the district court ruled that "[d]efendants provided legal advice only to Blankenship, and those efforts and subsequent filings can not be considered RICO predicate acts." We agree. To the extent that defendants were overly zealous or malicious, the remedy lies in a state law action for malicious prosecution or abuse of process, not in a federal RICO claim. Plaintiffs must assert predicate acts described in 18 U.S.C. § 1961(1), and they have not done so. Plaintiffs' assertion of predicate acts in their complaint is merely a "legal conclusion couched as a factual allegation," and thus not sufficient to survive a motion to dismiss. Papasan [v. Allain, 478 U.S. 265, 286 (1986)].


[Proper to Dismiss Non-Moving Defendants Standing in the Same Factual Legal and Factual Posture as Moving Defendants.]

Plaintiffs have alleged the same RICO claims against all of the parties. Logically, if they have failed to state a RICO claim regarding the moving parties, they have also failed to state a claim against the nonmoving parties. It is true that a "district court should proceed with great caution when dismissing a claim sua sponte." Boddie v. Am. Broad. Cos., 731 F.2d 333, 336 n.2 (6th Cir. 1984). However, the district court did not sua sponte dismiss plaintiffs' claim; it sua sponte dismissed the nonmoving parties who were in the same factual and procedural posture as the moving parties. Plaintiffs had the opportunity to argue the sufficiency of their claim against the defendants; the failure of Blankenship and the Walker Defendants to file their own motion to dismiss does not cure the defects in plaintiffs' complaint that prevented it from surviving a motion to dismiss. Thus, we affirm the district court's judgment regarding the nonmoving defendants.

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