Commercial Litigation and Arbitration

RICO — Third Circuit Requires a Minimum Duration of One Year for Closed-End Continuity

Battaist v. Arbors Mgmt., Inc., 2013 U.S. App. LEXIS 11815 (3d Cir. June 12, 2013):

In order to state a cognizable RICO claim, Battiste's complaint must plausibly allege the following elements: "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 495-96 (1985). The District Court held that Battiste had failed to properly allege a pattern. We agree.

Under RICO, a pattern of racketeering activity must include the commission of at least two acts of racketeering activity that are related and create a threat of continued criminal activity. Id. at 496 n.14. Continuity can take the form of a closed-ended scheme or an open-ended scheme. When the acts alleged occur in a specific, closed period of time, that period must be substantial. H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 242 (1989). Although we have declined to provide a "litmus test" for what length of time would be substantial enough to give rise to a pattern, we have held that a twelve-month period was too short. Hughes v. Consol-Pa. Coal Co., 945 F.2d 594, 611 (3d Cir. 1991).

In his complaint, Battiste only alleges conduct that occurred during a ten-month period. The complaint contains no allegation of additional or continuing criminal acts outside the period that ended in August 2007. As our case law makes clear and the District Court ably demonstrated, ten months is too short a period to constitute a "substantial period of time." Battiste has therefore failed to plausibly allege a pattern of racketeering activity.

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