Commercial Litigation and Arbitration

Failure to Raise PSLRA Bar to RICO Action below Bars Consideration on Appeal — Not Purely Legal Question

Olivier Family Interests, Ltd. v. Wright, 2013 U.S. App. LEXIS 17833 (8th Cir. Aug. 27, 2013):

In Appeal No. 12-2573, Michael Bogart and Doris Wright, as the personal representative of the estate of Russell Wright (who died during the pendency of this proceeding), appeal the judgment of the District Court awarding damages of $12,900,000 in accordance with a jury verdict in favor of Olivier Family Interests, Ltd. (OFI), and GBS International, LLC, on their state-law claims of misrepresentation and breach of fiduciary duty, and federal-law claim under the Racketeer Influenced Corrupt Organization Act (RICO), 18 U.S.C. §§ 1961-1968. In Appeal No. 12-3021, Joseph Wright appeals the misrepresentation and RICO verdicts; in Appeal No. 12-3024, Donald Wood appeals those verdicts as well. For the reasons that follow, we affirm.

First, we decline to consider the appellants' argument, newly raised on appeal, that the Private Securities Litigation Reform Act (PSLRA), Public. L. No. 104-67, 109 Stat. 737 (codified as amended in scattered sections of 15 U.S.C.), bars the civil RICO claim under § 1964(c), see Orr v. Wal-Mart Stores, Inc., 297 F.3d 720, 725 (8th Cir. 2002) (noting that appellate court ordinarily does not consider an argument raised for the first time on appeal; the court will consider a newly raised argument only if it is purely legal and requires no additional factual development or if manifest injustice would otherwise result), cert. denied, 541 U.S. 1070 (2004). The possible applicability of the PSLRA to this case is not a purely legal question, and appellants have not established that a manifest injustice would result if this court does not consider its applicability in the first instance. As to appellants' challenge to the sufficiency of the evidence supporting the jury's RICO verdict, see Craig Outdoor Adver., Inc. v. Viacom Outdoor, Inc., 528 F.3d 1001, 1009 (8th Cir. 2008) (stating standard of review and noting that a jury verdict is entitled to extreme deference), cert. denied, 555 U.S. 1136 (2009), we conclude that the evidence was adequate to support the jury's finding that (1) appellants committed racketeering activity or predicate acts consisting of a scheme to defraud OFI and GBS through wire fraud, as well as acts of misrepresentation; (2) appellants committed a pattern of racketeering activity that spanned a substantial period of time or was ongoing; and (3) OFI's and GBS's injuries were proximately caused by appellants' fraudulent activity, see United HealthCare Corp. v. Am. Trade Ins. Co., 88 F.3d 563, 570 (8th Cir. 1996) (noting that to prove a RICO violation, a plaintiff must establish (1) the existence of an enterprise, (2) defendant's association with the enterprise, (3) defendant's participation in predicate acts of racketeering, (4) that defendant's actions constitute a pattern of racketeering activity, and (5) that plaintiff's business or property was injured by conduct constituting a violation).

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