Commercial Litigation and Arbitration

Recurring Misapplications of RICO

From Meier v. Musburger, 588 F. Supp. 2d 883 (N.D. Ill. 2008):

Congress passed RICO in an effort to combat organized, long-term criminal activity. H.J. Inc. v. Northwestern Bell Telephone Co. , 492 U.S. 229, 242, 109 S. Ct. 2893, 106 L. Ed. 2d 195 (1989); Midwest Grinding Co., Inc. v. Spitz, 976 F.2d 1016, 1019 (7th Cir. 1992). Even though Congress never intended that the statute be employed to allow plaintiffs to turn garden-variety state law fraud and breach of fiduciary duty cases into RICO claims, Jennings, 495 F.3d at 472; Gamboa v. Velez, 457 F.3d. 703, 707 (7th Cir. 2006), from the beginning, the breadth of RICO's text and the lure of treble damages and attorneys' fees proved irresistible to those bent on federalizing such claims. See Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 499, n. 16, 105 S. Ct. 3275, 87 L. Ed. 2d 346 (1985); Morgan v. Bank of Waukegan, 804 F.2d 970, 973 (7th Cir. 1986). Thus, plaintiffs have tried — unsuccessfully — to wedge every manner of ordinary dispute into a RICO case. The reported cases run the gamut from a delivery of damaged furniture, Pizzo v. Bekin Van Lines Co. , 258 F.3d 629, 633 (7th Cir. 2001); to a breach of a computer leasing agreement, Mendelovitz v. Vosicky, 40 F.3d 182 (7th Cir. 1994), to poaching customers from a competitor, Midwest Grinding Company, Inc. v. Spitz, 976 F.2d 1016 (7th Cir. 1992), to — as here — a dispute over attorney's fees. McDonald v. Schencker, 18 F.3d 491 (7th Cir. 1994). A few plaintiffs have trafficked in more exotic fare: a compulsive gambler complaining about a casino's promotional mailings, Williams v. Aztar Ind. Gaming Corp., 351 F.3d 294 (7th Cir. 2003), or a track star's dispute of a failed drug test. Slaney v. The Intern. Amateur Athletic Federation, 244 F.3d 580 (7th Cir. 2001). But like more routine attempts to manufacture federal jurisdiction, the Seventh Circuit has not taken kindly to them. Aztar Ind. Gaming, 351 F.3d at 299-300.

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