Commercial Litigation and Arbitration

RICO — Exercising Caution While Affording Liberal Construction

From U.S. Airline Pilots Ass’n, 2010 U.S. App. LEXIS 15781 (4th Cir. July 30, 2010):

RICO, the federal claim at issue, "does not cover all instances of wrongdoing. Rather, it is a unique cause of action that is concerned with eradicating organized, long-term, habitual criminal activity." Gamboa v. Velez, 457 F.3d 703, 705 (7th Cir. 2006). The Supreme Court has described the penalties authorized by RICO as "drastic." H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 233 (1989). Indeed, in a civil RICO action, a successful plaintiff may recover not only costs and attorney's fees, but also treble damages. See 18 U.S.C. § 1964(c). These penalties are primarily designed to provide society with a powerful response to the dangers of organized crime. See H.J. Inc., 492 U.S. at 245. Thus, although we read the terms of the statute "liberally" in order to "effectuate its remedial purposes," Boyle v. United States, 129 S. Ct. 2237, 2243 (2009) (internal quotation marks omitted), we must also exercise caution

to ensure that RICO's extraordinary remedy does not threaten the ordinary run of commercial transactions; that treble damage suits are not brought against isolated offenders for their harassment and settlement value; and that the multiple state and federal laws bearing on transactions . . . are not eclipsed or preempted.

Menasco, Inc. v. Wasserman, 886 F.2d 681, 683 (4th Cir. 1989).

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