Empress Casino Joliet Corpora v. Balmoral Racing Club, Incorpor
831 F.3d 815
7th Cir.2016Background
- Illinois enacted a 2006 law taxing large casinos to fund horseracing; it contained a sunset provision and expired in May 2008. Plaintiffs (casinos) challenged later 2008 legislation that reimposed a racing-related tax.
- Racetrack executive John Johnston, lobbyist Alonzo Monk (former Blagojevich aide), and Governor Rod Blagojevich engaged in recorded communications during 2008; Monk pled guilty and Johnston received immunity and testified.
- Plaintiffs alleged the racetracks conspired to bribe Blagojevich (a $100,000 campaign contribution) in exchange for his signature on the 2008 Act and sued under RICO §1962(d) and later added Illinois claims for civil conspiracy and unjust enrichment.
- A jury found for the casinos and awarded $25,940,000 in compensatory damages; the district court trebled damages under RICO to $77,820,000. Defendants appealed.
- The Seventh Circuit affirmed liability on the underlying facts (quid pro quo) and upholding most trial rulings but held the evidence insufficient to support that the defendants agreed to a RICO "pattern" (continuity), so RICO trebling was reversed; state-law damages ($25,940,000) remain.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of quid pro quo agreement to bribe governor | Recordings and testimony show Blagojevich (via Monk) conditioned signature on a $100,000 contribution and Johnston agreed | No express agreement; testimony denied an illicit agreement; contribution discussions lawful political activity | Court: Sufficient evidence for reasonable jury to find quid pro quo (agreement existed) |
| Agreement to commit at least two RICO predicate acts | Bribery, official misconduct, and multiple wire communications suffice as two or more predicates | Predicates were isolated and not part of any agreed multi-act scheme | Court: Sufficient evidence that defendants agreed that predicate acts (bribery/wire uses) would occur |
| Pattern (continuity) requirement for RICO | Open-ended continuity: threat of repetition (e.g., sunset in 2011, routine use of bribery by Blagojevich) supports RICO pattern | Single quid pro quo tied to one bill is a one‑time scheme with a natural ending point, not a pattern | Court: Insufficient evidence of continuity (no closed- or open-ended continuity); RICO pattern not proven; trebled damages reversed |
| District court’s grant of leave to amend complaint to add state claims | Amendment tied to same factual theory (2008 quid pro quo) and timely after appellate ruling; little prejudice | Late amendment prejudiced defendants (discovery, punitive damages potential) | Court: No abuse of discretion; amendment allowed and state claims valid |
Key Cases Cited
- Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (U.S. 1985) (elements of a §1962(c) RICO violation)
- H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229 (U.S. 1989) ("continuity plus relationship" requirement for RICO pattern)
- Salinas v. United States, 522 U.S. 52 (U.S. 1997) (conspiracy standard for RICO; agreement that someone will commit predicates suffices)
- Skilling v. United States, 561 U.S. 358 (U.S. 2010) (bribery and honest-services fraud analysis)
- Baxter v. Palmigiano, 425 U.S. 308 (U.S. 1976) (adverse inference from silence permissible in civil cases)
- Empress Casino Joliet Corp. v. Johnston, 763 F.3d 723 (7th Cir. 2014) (prior appellate decision distinguishing 2006 Act and 2008 Act proximate-cause issues)