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RICO — Hub-and-Spoke Configuration ≠ Enterprise

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In addition to finding that the “Google Network” was too diffuse to comprise a RICO enterprise, the Court in Vulcan Golf, LLC v. Google Inc., 2008 U.S. Dist. LEXIS 60608 (N.D. Ill. July 31, 2008), noted that, whatever validity a hub-and-spoke configuration may have as a form of conspiracy, it does not amount to a RICO enterprise:

As ... discussed [in In re Lupron Mktg. & Sales Practices Litig., 295 F. Supp. 2d 148, 173-74 (D. Mass. 2003)], the hub-and-spoke scheme alleged by the plaintiffs is generally not accepted as a RICO enterprise:

Most courts have found that complaints alleging hub-and-spoke enterprises fail to satisfy the RICO enterprise requirement. See VanDenBroeck v. CommonPoint Mortg. Co., 210 F.3d 696, 700 (6th Cir. 2000) (rejecting a RICO enterprise involving defendant bank and a series of sub-lenders with whom the bank associated, because there were no allegations of a mechanism by which this group "conducted its affairs or made decisions"); New York Auto. Ins. Plan v. All Purpose Agency & Brokerage, Inc. , 97-CV-3164, RICO Bus. Disp. Guide 9611, 1998 WL 695869 at *6 (S.D.N.Y. Oct. 6, 1998) (rejecting a hub-and-spoke enterprise in which auto-insurer conspired with individual clients to provide them lower insurance rates, without any evident association between the clients; stating "Such a series of discontinuous independent frauds is not an 'enterprise.' Each is a single two-party conspiracy."); First Nationwide Bank v. Gelt Funding, Corp., 820 F. Supp. 89, 98 (S.D.N.Y. 1993) (holding that hub-and-spoke scheme is not an enterprise); Blue Cross and Blue Shield of Ala. v. Caremark, Inc., 98-CV-1285, RICO Bus. Disp. Guide 9828, 1999 WL 966434 at *8 (N.D. Ill. 1999) (rejecting enterprise theory in RICO insurance-fraud claim involving health providers because "[p]laintiffs fail to allege how this large and geographically diverse group of almost 3,000 independent physicians and entities acted in concert with one another .... there is no indication that the individual [providers] were even aware of each other's existence."); Blue Cross of Cal. v. SmithKline Beecham Clinical Labs., Inc., 62 F. Supp. 2d 544, 551-53 (D. Conn. 1998) (rejecting proposed enterprise consisting of insurer and, among others, thousands of doctors, where there was no evidence doctors were even aware of alleged kickback scheme).

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New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

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