This action is before the court on defendant’s motion to dismiss Counts I and II of plaintiff’s Amended Complaint for failure to state a claim, Fed.R.Civ.P. 12(b)(6), and for summary judgment on Counts III and IY of that Complaint. At issue are important legal questions involving the scope and application of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001, et seq. and the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961, et seq., in a civil context. Underlying these broad issues, however, are significant allegations that defendant laid off members of the plaintiff class illegally and, specifically to deprive them of particular employee benefits to which they were soon to become entitled. The case therefore involves a fundamental question regarding the extent to which an industry may effectuate economies by depriving employees of prospective benefits which they otherwise would have received but for the actions taken by their employer.
FACTS
This is a class action brought on behalf of four named plaintiffs and all others similarly situated. Plaintiffs allege that they are all former employees of the defendant, each of whom was laid off as he approached the time at which he would become eligible for two varieties of “Magic Number” employee benefits, embodied in the 1977 collective bargaining agreement between defendant and the United Steel Workers (“USW”). These benefits are and would be available to employees who have been laid off for two years or who have lost their jobs as a result of a plant closing. An employee becomes eligible for “Rule of 65” benefits if, on the last day worked, he has twenty years of service with defendant and if, at any time within two years of his last day worked, the employee’s age and years of service total at least sixty-five years. Similarly, 70/75 benefits are available to employees with at least fifteen years of service who are fifty years of age or older and whose age and service total seventy or more, or who are any age, with age and service totaling seventy-five or more. See Complaint, ¶¶ 11-13. It should be noted that for the purpose of these benefits, years of service include the first two years following a layoff. This so-called “creep provision” operates such that the rehiring of a laid-off employee for even one day commences a new two-year period, for the purposes of both calculating years of service and determining eligibility for Rule of 65 benefits. Aff. of Stephen C. Rexford, M 16, 17, 19.
Plaintiffs contend that, in order to reduce the amount of Magic Number benefits to be paid to employees, defendant implemented a “capping program,” the result of which was the layoff of hundreds of Continental employees who were close to satisfying, but had not yet satisfied, the requirements for such benefits. Furthermore, plaintiffs allege, defendant has not recalled these workers, despite the occurrence of job openings to which they were arguably entitled. This too, plaintiffs allege, was a series of decisions improperly motivated by a desire to avoid paying these types of benefits in the future. Complaint, ÍI20.
In answer to these allegations, defendant essentially pleads economic necessity. During the 1970s, defendant contends, the can industry as a whole suffered a severe decline. Can purchasers began to manufacture their own cans or to utilize plastic containers or other alternatives to metal cans. Technological changes resulted in the conversion from three- to two-piece cans, requiring fewer workers to assemble. *1498 These circumstances caused decreases in production, plant closings and the layoff of workers. The can industry was forced to implement extensive austerity measures. These austerity measures were primarily directed to reducing labor costs. For example, defendant attempted to limit the number of temporary employees hired, by controlling inventories and regulating the timing of vacations and use of overtime. Additionally, Continental employed a “cap and shrink” strategy, whereby plants would be allocated a maximum number of employees, which number would then shrink by attrition until the plant could be closed down. Defendant admits that “Continental undeniably did look at pension costs when deciding what plants to shut down and cap.” However, it argues, “the decision to cap and shrink was not made solely on the basis of pension costs. A given plant’s age, capital depreciation, condition, layout, machinery, customer base, manufacturing effectiveness and capability, product mix, geographical proximity to markets, proximity to transportation, lease provisions and numerous other factors were also considered.” Rexford Aff., ¶ 29. Of course, employee benefits in general, and Magic Number benefits in particular, were a major expense incurred by Continental: Magic Number benefits provide for the payment of an employee’s pension at an earlier age, in addition to a special monthly supplement payable until the age of 62 or the obtaining of other long-term employment. Additionally, these benefits were not paid out of a pension fund, but rather, were unfunded and thus payable out of a given year’s revenues. Hence they are seen as particularly costly by the industry, including defendant.
Alleging that defendant’s actions with respect to the plaintiff class violate RICO and ERISA, plaintiffs bring this action seeking declaratory and injunctive relief as well as damages. Related actions have been brought in Los Angeles, California, Pittsburgh, Pennsylvania and in Alabama. The Los Angeles case, captioned
Amaro v. Continental Can Company
(No. 82-8984) was filed on August 9,1982 and challenged Continental’s practices of curtailing operations and laying off workers in order to prevent plaintiffs from attaining eligibility for particular employee benefits. This case was dismissed on December 15, 1982 on grounds of
res judicata,
based upon a pri- or arbitration between Continental and the USW concerning these layoffs, but, on January 23, 1984, the Court of Appeals for the Ninth Circuit reversed.
DISCUSSION
A. Counts III and IV: The ERISA Claims
Counts III and IV of plaintiffs’ complaint request declaratory and injunctive relief *1499 and damages as a result of defendant’s alleged violation of section 510 of ERISA, 29 U.S.C. § 1140. That section states, in pertinent part:
It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan, this subchapter, section 1201 of this title, or the Welfare and Pension Plans Disclosure Act, or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, this subchapter or the Welfare and Pension Plans Disclosure Act.
Defendant moves to dismiss these counts on two separate grounds. First, defendant argues that the Magic Number benefits here at issue are not the type of benefits covered by ERISA. Second, defendant claims that these counts should be dismissed because plaintiffs have failed to exhaust the arbitration remedy to which they must submit under the terms of the existing collective bargaining agreement.
The gravamen of defendant’s argument that Magic Number benefits are not governed by the provisions of ERISA is the contention that these benefits are at their essence layoff benefits and not retirement benefits. Continental asserts that the legislative history shows such benefits to be beyond the purview of those wrongs which Congress intended to right when it passed ERISA.
This argument is wholly without merit. First, the language of the statute, as quoted
supra,
is perfectly clear on the scope of ERISA: it discusses employees’ right “under the provisions of an employee benefit plan,” and not just with respect to retirement plans. Indeed, ERISA defines “employee benefit plan” as “an employee welfare benefit plan or an employee pension benefit plan or a plan which is both an employee welfare benefit plan and an employee pension benefit plan.” 29 U.S.C. § 1002(3). Furthermore, an “employee welfare benefit plan” is defined to include “medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment....” 29 U.S.C. § 1002(1)(A). Defendant concedes that the plan here at issue involves “layoff benefits.’-’ Therefore the court concludes that the Magic Number benefits are governed by ERISA.
See, e.g., Mamula v. Satralloy,
*1500
This holding derives strength from the particular nature of these benefits: they are covered by the Continental Pension Plan, and are apparently referred- to as pension benefits throughout that plan. Moreover, like pension benefits, they are triggered by the discontinuation of work by an employee of a certain age after a certain amount of service. Finally, in many cases, Magic Number benefits will result in the receipt of traditional pension benefits at an earlier age. It is clear, therefore, that these benefits are portrayed as pensions, are akin to pensions, and affect employees’ pension rights.
See generally
29 U.S.C. § 1002(2) (definition of pension plan);
Commercial Mortgage Insurance, Inc. v. Citizens National Bank of Dallas,
This strengthens the conclusion that these benefits are covered by ERISA, even when it is construed as narrowly as defendant argues it should be. Defendant’s motion to dismiss Counts III and IV on this ground is, therefore, denied. 1
The second ground urged by defendant in support of its motion to dismiss Counts III and IV of the Complaint presents more difficult questions. Defendant contends that plaintiffs should have exhausted the arbitration remedy available to them, and as they have not, their case should be dismissed. Defendant offers three bases for this contention: first, that the 1977 collective bargaining agreement between Continental and the USW requires such arbitration; second, that the behavior of related plaintiffs in similar actions demonstrates that arbitration is required; and third, that the caselaw establishes that claims such as these are not exempt from arbitration on the theory that they are statutory claims. Plaintiffs contend that they were not required to grieve or arbitrate a claim seeking to vindicate an unwaivable statutory right, arguing that this position derives *1501 support from both caselaw and from the legislative history of ERISA.
Plaintiffs’ obligation to exhaust their arbitration remedy stems, argues defendant, from the 1977 collective bargaining agreement between the USW and Continental. Article 13 of that agreement creates a complex four-step grievance process, to handle “any difference between the Local Management and the Union or employees as to the interpretation or application of or compliance with this Agreement respecting wages, hours, or conditions of employment,” including “any dispute over whether a complaint is subject to these procedures.” Section 13.2. The Pension Agreement, in turn, provides that
If, during the term of this Agreement, any differences shall arise between the Company and any Employee who shall be an applicant for a lump sum retirement allowance, pension or deferred benefit as provided in this Agreement, as to whether or not such Employee is entitled to or as to the amount of such lump sum retirement allowance, pension or deferred benefit, such differences ... may be taken up as a grievance in accordance with the applicable provisions of the Master Agreement____
Defendant’s Brief at 23-24.
Initially, the court notes that the language of the Agreement cited by defendant is entirely precatory: differences
“may
be taken up as a grievance.” Although plaintiffs do not argue this point, the court reads this language as making a grievance procedure available to Continental employees, but not mandating that they utilize it. This being the case, and the court is unaware of any evidence to the contrary, plaintiffs’ suit is well within the bounds of the collective bargaining agreement and pension agreement. For this reason alone, defendant’s motion to dismiss must be denied.
See generally John Wiley & Sons, Inc. v. Livingston,
However, even if the language of the agreement were as defendant reads it, arbitration would not be mandated in this instance. The court recognizes the strong public policy which favors arbitration in general.
See, e.g., United Steelworkers v. Warrior & Gulf Navigation Co.,
In submitting his grievance to arbitration, an employee seeks to vindicate his contractual right under a collective bargaining agreement. By contrast, in filing a lawsuit under Title VII, an employee asserts independent statutory rights accorded by Congress.
Id.
at 49-50,
The Court reinforced the
Alexander
holding in
Barrentine v. Arkansas-Best Freight System, Inc.,
Because the arbitrator is required to effectuate the intent of the parties rather than to enforce the statute, he may issue a ruling that is inimical to the public policies underlying the FLSA, thus depriving an employee of protected statutory rights.
... not only are arbitral procedures less protective of individual statutory rights but arbitrators very often are powerless to grant the aggrieved employees as broad a range of relief.
Id.
at 744-45,
Finally, this past term, a unanimous Court once more rejected “the contention that an award in an arbitration proceeding brought pursuant to a collective-bargaining agreement should preclude a subsequent suit in federal court.”
McDonald v. City of West Branch, Michigan,
_ U.S. _,
Nor is the legislative history of ERISA to the contrary. As finally adopted, the Act provides for claims procedures within every benefit plan, through which an aggrieved party can apply specifically in the event of a denial of a claim for benefits. 29 U.S.C. § 1133. The courts have construed this section to require the exhaustion of such internal remedies in the event of a denial of such a claim.
See, e.g., Wolf v. National Shopmen Pension Fund,
Nothing in the legislative history of ERISA indicates that this sort of situation was subject to compulsory arbitration. Senator Vance Hartke of Indiana proposed an amendment which would have made claims such as these justiciable by an administrative mechanism to be established by the Labor Department, see II Legislative History, supra, at 1774-75, 1835-37. This amendment was defeated. As proposed, the amendment provided that such administrative mechanism “shall not displace the grievance-arbitration proceedings provided by a collective bargaining agreement if its procedure and proceeding would satisfy the arbitration deferral principles of the National Labor Relations Board were the dispute to constitute an unfair labor practice.” Id. at 1835. Neither this language nor the colloquy between Senator Hartke and Senator Williams cited by defendant provide for the arbitration of disputes not arbitrable under the terms of the collective bargaining agreement. As discussed, supra, this dispute arises as a result of the alleged violation of plaintiffs’ statutory rights, and not their contractual rights. As to the latter, section 1133 provides for their internal adjudication; as to the former, the statute is silent and the legislative history indicates that, as Senator Javits stated initially, employees complaining under the discrimination provision of ERISA have the same rights to go to court as those alleging race or sex discrimination. Id. at 1641-42. In the area of race discrimination, for example, the Supreme Court preserved this right against an attack for failure to exhaust arbitration remedies in Alexander v. Gardner-Denver, supra. With respect to discrimination on the basis of pension status, this court recognizes that right here.
In so doing, the court follows the well-reasoned opinion of the Ninth Circuit in the Los Angeles litigation, and rejects the nonbinding opinion of the Seventh Circuit in
Kross v. Western Electric Co., Inc.,
We are faced solely with an alleged violation of a protection afforded by ERISA. There is no internal appeal procedure either mandated or recommended by ERISA to hear these claims. Furthermore, there is only a statute to interpret. That is a task for the judiciary, not an arbitrator. Alexander,415 U.S. at 57 [94 S.Ct. at 1024 ], Therefore, a “primary reason for the exhaustion requirement,” Amato,618 F.2d at 568 ; see Kross,701 F.2d at 1245 (quoting Amato), is not present in this case. Accordingly, we find Kross to be based on a flawed premise and we refuse to follow it.
Finally, defendant argues that plaintiffs have somehow waived their right to bypass *1505 arbitration by virtue of the action of previous plaintiffs in related suits. Arguing that plaintiffs’ interests are indistinguishable from those of the United Steel Workers, defendant relies upon the fact that arbitration was instituted and failed in Los Angeles; that it was instituted and withdrawn in Pittsburgh; and that the USW is defending a claim against it in the Alabama litigation on the grounds of failure to exhaust arbitration/grievance remedies. Plaintiffs argue that section 510 rights are unwaivable.
The court agrees with plaintiffs’ position. As the Supreme Court stated in Alexander v. Gardner-Denver:
... we think it clear that there can be no prospective waiver of an employee’s rights under Title VIL It is true, of course, that a union may waive certain statutory rights related to a collective activity, such as the right to strike. These rights are conferred on employees collectively to foster the processes of bargaining and may properly be exercised or relinquished by the union as collective-bargaining agent to obtain economic benefits for union members. Title VII, on the other hand, stands on plainly different ground; it concerns not majoritarian processes, but an individual’s right to equal employment opportunities. Title VII’s strictures are absolute and represent a congressional command that each employee be free from discriminatory practices.
For all of the above reasons, defendant’s motion to dismiss Counts III and IV of the Complaint, or for summary judgment, is denied.
B. Counts I and II: The RICO Claims
Counts I and II of plaintiffs’ Complaint alleges that, in carrying out its “unlawful scheme and course of conduct” whereby Continental laid off employees so as to deprive them of their Magic Number benefits, defendant used the mails in violation of 18 U.S.C. § 1341 and the telephone in violation of 18 U.S.C. § 1343. Plaintiffs further allege “an unlawful conspiracy between defendant and various of its officials and employees,” Complaint, 1125, and conclude that defendant has violated and continues to violate 18 U.S.C. §§ 1962(c) and (d). These sections state:
(c) It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of an unlawful debt.
(d) It shall be unlawful for any person to conspire to violate any of the provisions of subsections (a), (b) or (c) of this section.
Plaintiffs demand declaratory and injunctive relief from such violations in Count I of their Complaint and treble damages in Count II.
Defendant moves to dismiss these counts in whole or in part on five separate grounds: (1) that plaintiffs have failed to plead mail or wire fraud, or failed to plead such fraud with the particularity required by Federal Rule of Civil Procedure 9(b); (2) that plaintiffs have failed to plead a conspiracy, in that Continental cannot be held to conspire with its own employees or officers; (3) that the Complaint fails to set forth the racketeering-related injury for which RICO provides redress; (4) that plaintiffs have failed adequately to allege an enterprise as defined by 18 U.S.C. § 1961(4); and (5) that injunctive relief is not available to private parties under RICO. Although defendant’s motion addresses itself to the technical failings of plaintiffs’ Complaint, underlying it is a sense that the injury suffered by plaintiffs, if any, ought not fall under the aegis of a statute that was designed to counter the real peril of organized crime. Nonetheless, a proper analysis of a RICO complaint must compare the language of such complaint to the statute from which it arises.
1. The mail fraud/wire fraud allegations
Defendant’s motion to dismiss plaintiffs’ RICO counts for failure adequately to plead mail and wire fraud is supported by two separate arguments: first, that plaintiffs have failed to allege a scheme to defraud in that no fraudulent misrepresentation or detrimental reliance has been alleged; and second, that no specific intent to defraud has been alleged, as is required by the statutes at issue. Further, defendant argues that plaintiffs’ allegations of fraud are not pled with the particularity required by Federal Rule of Civil Procedure 9(b).
In order to set forth a cause of action under RICO, 18 U.S.C. § 1962(c); a plaintiff must allege, in part, “a pattern of racketeering activity.” Such a pattern includes two acts of racketeering activity, 18 U.S.C. § 1961(5); included within the definition of racketeering activity are violations of the federal statutes prohibiting mail fraud, 18 U.S.C. § 1341, and wire fraud, 18 U.S.C. § 1343. See 18 U.S.C. § 1961(1). Plaintiffs allege that defendant has committed multiple violations of the mail and wire fraud statutes and that, as a result, the predicate offense necessary to invoke RICO have been alleged.
The essential elements of an offense under 18 U.S.C. §§ 1341 and 1343 are (1) the existence of a scheme to defraud; (2) the use of the mails or wires in furtherance of such scheme; and (3) culpable participation by the defendant.
Pereira v.
*1507
United States,
Defendant’s first argument, that plaintiffs have failed to set forth the required misrepresentations or omissions is without merit. A course of conduct may comprise a scheme or artifice to defraud, even absent particular fraudulent state-merits or omissions. Indeed, the statute discusses two separate types of mail/wire fraud offenses: one may act pursuant to a “scheme or artifice to defraud”
or
one may act “by means of false or fraudulent pretenses, representations or promises.” Indeed, the Third Circuit has recently joined a number of other courts which have given the statute such a disjunctive meaning. Thus, in
United States v. Frankel,
... the opinions of this court lend support to the proposition that “scheme or artifice to defraud” is to be read independently of “obtaining money by false pretenses.” ... Schemes to defraud come within the scope of the statute even absent a false representation.
As to the former, if true, such scheme violated ERISA; as such, it contravened important public policies. This alone constitutes fraud.
See Parr v. United States,
As a result of the failure [of the courts or Congress] to limit the term “scheme or artifice to defraud” to common law definitions of fraud and false pretenses and schemes prohibited by State law, the mail fraud statute generally has been available to prosecute a scheme involving deception that employs the mails in its execution that is contrary to public policy and conflicts with accepted standards of moral uprightness, fundamental honesty, fair play and right dealing.
There is thus no question but that the scheme alleged by plaintiffs is, if true, violative of both statute and of the strong public policy expressed therein. It may also violate some fiduciary duty owed to plaintiffs by defendant as a result of the relationship established by the parties’ collective bargaining agreement.
See Boffa, supra,
*1510 2. The Conspiracy Allegations
Plaintiffs allege that defendant’s conduct in unlawfully instituting its capping program “was part of and resulted from an unlawful conspiracy between defendant and various of its officials and employees and perhaps with others unknown to plaintiffs.” Complaint It 25. " Defendant moves to dismiss such conspiracy claim, which is a part of Counts I and II of the Complaint, on two grounds. First, defendant contends that a corporate entity cannot, as a matter of law, conspire with its own officials and employees. Second, defendant argues that recent Third Circuit precedent makes clear that RICO, 18 U.S.C. § 1962(d), “prohibits conspiracies to knowingly further the affairs of the enterprise; mere agreement to commit the predicate acts is not sufficient to support a charge of conspiracy under § 1962(d)”.
Seville, supra,
In evaluating these arguments, the court notes that, technically, defendant’s arguments do not address the Complaint herein, because plaintiffs claim a conspiracy not only between defendant and its employees, but additionally “perhaps with others unknown to plaintiffs”. Similarly, plaintiffs have been careful to state that the predicate acts alleged, were “part of and resulted from” such conspiracy, implying agreement to commit more than merely the predicate acts. While the court recognizes that, although fraud is alleged, every element of the RICO offense here charged need not be pleaded with particularity,
Seville, supra,
Similarly, defendant should plead with some specificity the persons with whom defendant allegedly conspired, if any. Moreover, if such persons are officers or employees of defendant, plaintiffs should be prepared to prove, and must allege in good faith, that such officers or employees so acted in pursuit of their own ends, rather than for the benefit and on behalf of the defendant corporation.
See, e.g., Copperweld Corp. v. Independence Tube Corp.,
_ U.S. _,
Plaintiffs are correct that, where criminal charges are involved, courts have held that corporations and their employees may conspire one with the other; as stated by the First Circuit
There is a world of difference between invoking the fiction of corporate personality to subject a corporation to civil liability for acts of its agents and invoking it to shield a corporation or its agents from criminal liability where its agents acted on its behalf.
United States v. Peters,
Therefore, the court hereby directs plaintiffs to amend their complaint within twenty days to allege a conspiracy (1) not based solely upon an agreement to commit the predicate acts charged and (2) that either names parties not employees or officers of defendant or, if employees or officers are named, alleges in good faith that such employees or officers acted in pursuit of individual benefits, rather than those of defendant. Pending such re-pleading, defendant’s motion to dismiss plaintiff’s conspiracy allegations is denied without prejudice.
3. Racketeering
Defendant’s primary attack on Counts I and II of the Complaint is one that is, by now, familiar to the courts and commentators. Like so many others charged under the terms of civil RICO, defendant finds itself accused of racketeering activity, 18 U.S.C. § 1961(1), and even a pattern thereof, 18 U.S.C. § 1961(5), and responds with incredulity, that though it may have violated ERISA, it is no racketeer.
See
Defendant’s Brief at 61; Defendant’s Reply Brief at 27; Defendant’s Supplemental Letter Briefs (2/10/84) at 3-4, (8/2/84) at 3, (9/18/84) at 4. Reminding the court that the overriding purpose of the RICO statute, is “the eradication of organized crime in the United States,
see United States v. Turkette,
Defendant does so here by arguing primarily that the Complaint fails to set forth “racketeering related injury.” Defendant’s Brief of 61-70; Defendant’s Reply Brief at 24-27. 16 In so doing, defend *1513 ant relies on the language of the statute authorizing civil suits such as these. That language states:
Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of suit, including a reasonable attorney’s fee.
18 U.S.C. § 1964(c). It argues that the “by reason of a violation of section 1962” language means that one is subject to civil suit only for the activities prohibited by that section, i.e., the investment of income derived from a pattern of racketeering or the collection of an unlawful debt in an interstate enterprise, 18 U.S.C. § 1962(a), maintenance of an interest or control in an interstate enterprise through a pattern of racketeering activity or through collection of an unlawful debt, 18 U.S.C. § 1962(b), participation in or conduct of an interstate enterprise through a pattern of racketeering activity or collection of an unlawful debt, 18 U.S.C. § 1962(c), or conspiracy to do any of the above. 18 U.S.C. § 1962(d). Hence, defendant contends, this language requires the injury alleged to be other than that resulting merely from the predicate acts which make up the “pattern of racketeering activity” charged; rather, it must be racketeering injury of the sort intended to be addressed by RICO and accordingly specified in section 1962. Defendant argues that the Complaint herein is deficient in that plaintiffs allege “an unlawful scheme” as the cause of their injuries — the same unlawful scheme that constitutes the predicate acts and, as such, not injury resulting from an enterprise having been run through a pattern of racketeering activity. Defendant’s Brief at 69; Defendant’s Re: ply Brief at 27.
Currently, the circuits are split on the question of whether racketeering-related injury needs to be alleged.
Compare Sedima, S.P.R.L. v. Imrex Co., Inc.,
The court here finds no reason to disagree with its colleagues within this circuit who have held that racketeering related injury need not be alleged in order to set forth a civil RICO cause of action. Indeed, the court agrees with the Seventh Circuit that such a requirement flies in the face of Congress’ desire to cut a “broad swath ... in order to address the evil it sought.”
Both the proponents and the opponents of RICO recognized the extraordinary breath of its terms. The opponents argued that the breadth of the statute might chill civil liberties and the proponents of RICO defended the broad terms on the grounds that narrower terms would provide loopholes through which the primary targets might escape. Indeed, the unifying thread of RICO’s legislative development was a desire to avoid creating loopholes for clever defendants and their lawyers. “In short, Congress chose to provide civil remedies *1515 for an enormous variety of conduct, balancing the need to redress a broad social ill against the virtues of tight, but possibly overly astringent, legislative draftsmanship.”
Haroco, supra,
Courts should not be left to impose liability based on their own tacit determination of which defendants are affiliated with organized crime. Nor should they create standing requirements that would preclude liability in many situations in which legislative intent would compel it. Complaints that RICO may effectively federalize common law fraud and erode recent restrictions on claims for securities fraud are better addressed to Congress than to courts.
Note,
supra,
95 Harv.L.Rev. at 1120-21.
See also Haroco, supra,
Moreover, the requirement sought to be introduced by plaintiff is an untenable one. First, it gives rise to difficult problems of definition: what is a “racketeering related injury”?
See, e.g., Haroco, supra,
In sum, the court here refuses to engraft a racketeering-related injury requirement onto RICO, and finds persuasive the arguments of those courts which have similarly refused to do so. However, even if such requirement were adopted, the court agrees with plaintiffs that it would be satisfied here. Plaintiffs complain of injury resulting from defendant’s capping program as a whole. The capping program, in turn, was furthered by defendant’s predicate racketeering acts, Complaint 1124; however, it was more than merely a series of violations of the mail and wire fraud statutes. What injured plaintiffs was not any one particular letter or telephone call, but the underlying scheme as a whole, which enabled defendant to perpetrate an ongoing systematic corporate-survival strategy to violate plaintiffs’ hard-earned rights to employee benefits, in violation of ERISA. As such, plaintiff has adequately alleged injury beyond that caused by the predicate acts of mail and wire fraud.
See, e.g., Alexander Grant, supra,
Defendant’s motion to dismiss for failure to allege racketeering related injury is denied.
4. Enterprise
Defendant also moves to dismiss Counts I and II for failure properly to plead an enterprise, as required by 18 U.S.C. § 1962, both because what constitutes the enterprise is not adequately set forth or alternatively because the enterprise alleged is defendant itself, which is impermissible under the Act. In response, plaintiffs contend that defendant is but one of the enterprises here alleged to be involved.
In the case at bar, there are several enterprises. One is Continental itself. A second consists of a group of individuals (officials and employees of Continental) who were associated in fact for the purpose of developing and implementing the Capping Program. A third is Continental Can Company, Inc. a wholly-owned subsidiary of defendant Continental which operates the business that is involved here. Still another enterprise is that business itself or the plants covered by the magic number pension provisions.
Plaintiffs’ Brief at 47. At oral argument, plaintiffs conceded that what, exactly, comprised the enterprise has not been specified in the Complaint. Transcript of Proceedings (1/16/84) at 13-14. The court agrees, and therefore directs that plaintiffs amend their complaint to allege the enterprise or enterprises involved, as required by 18 U.S.C. § 1961(4) and the Third Circuit authority interpreting that section. 20
*1517
The court thus need not, at this point, reach the troublesome questions raised by the enterprise notion and, indeed, cannot absent a pleading of what enterprise or enterprises is/are to be alleged, as set forth by plaintiff after some reflection.
See
Transcript,
supra,
at 13-14 (plaintiffs “didn’t think that [the pleading of an enterprise] was going to be a problem.”) In amending their Complaint, however, plaintiffs should be aware that the Third Circuit has recently joined the Fourth, Seventh, Eighth and Ninth Circuits in holding that an enterprise and a RICO defendant may not be a single entity.
B.F. Hirsch v. Enright Refining Co., Inc.,
Defendant’s motion to dismiss for failure to plead an enterprise is denied without prejudice. Plaintiffs are directed to amend their complaint within twenty days to set forth the enterprise participated in or conducted by defendant. 21
*1518 5. Injunctive Relief
Defendant’s final attack on the Complaint seeks dismissal of plaintiffs’ prayer for injunctive relief. Such attack thrusts the court into what has become an intensive debate as to the propriety of private parties seeking such relief. The debate is created by the language of the statute. Thus 18 U.S.C. § 1964(a) grants to district courts “jurisdiction to prevent and restrain violations of section 1962 of this chapter”. Section 1964(b) then states, in pertinent part:
The Attorney General may institute proceedings under this section____ Pending final determination thereof, the court may at any time enter such restraining orders or prohibitions, or take such other actions, including the acceptance of satisfactory performance bonds, as it shall deem proper.
Section 1964(c) creates private rights of action:
Any person injured in his business or property by reason of a violating of Section 1962 of this chapter may sue therefore in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of suit, including a reasonable attorney’s fee.
Hence, those courts and commentators arguing against the right of private plaintiffs to seek injunctive relief contend that Congress’ failure to specifically allow for such relief prevents courts from inferring its existence. Such authorities point generally to the impropriety of judically creating remedies where Congress has expressly provided others, and specifically to the Supreme Court’s interpretation of similar language in the Sherman act as precluding private suits for injunctive relief.
See De Ment v. Abbott Capital Corp.,
Those on the other side respond primarily by invoking the traditional equity powers of the court,
Chambers Development Co., supra,
Currently, the argument rages. While the Second Circuit seems to have decided against providing injunctive relief for private parties,
Sedima, supra,
For these reasons, the court reserves decision on the question of the propriety of plaintiffs’ claim for injunctive relief, pending the trial of this matter.
CONCLUSION
Defendant’s motions are disposed of in accordance with the foregoing opinion. 22 Plaintiffs are directed to submit an order in conformity herewith.
Notes
. Defendant argues that the legislative history of ERISA indicates that the purpose of the Act was to protect the "integrity of retirement pension benefits through minimum vesting standards.” Defendant's Brief at 50. That this was
a
purpose of ERISA cannot be gainsaid. However, "the starting point for interpreting a statute is the language of the statute itself. Absent a clearly expressed legislative intention to the contrary, that language must ordinarily be regarded as conclusive.”
Consumer Product Safety Commission v. GTE Sylvania, Inc.,
. This past term, the Supreme Court in
Schneider Moving & Storage Co. v. Robbins,
_ U.S. _,
. Judge Bloch recently reaffirmed this decision in considering the consolidated cases now before him, as well as in
Delgrosso v. Spang and Co., supra,
. The court believes that the Third Circuit would also reject
Kross.
Thus, in
Viggiano v.
*1505
Shenango China Division of Anchor Hocking Corp.,
. The mail fraud statute states:
Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined not more than $1,000 or imprisoned not more than five years, or both.
. The court cited a long line of cases for this proposition.
. These cases are premised upon the notion that the schemes at issue served to defraud citizens of their intangible right to honest and faithful service on the part of their public servants. While not ruling on this specific issue, the Court of Appeals for the Third Circuit has held that such intangible rights may be the subject of a mail fraud prosecution.
United States v. Boffa,
. The Third Circuit apparently sanctions this use of the statute as well, at least in the labor union context.
Boffa, supra,
. The Third Circuit has held that the National Labor Relations Act does not give rise to intangible rights the violation of which necessarily creates criminal liability under the mail fraud statute.
Boffa, supra,
. Such amendment is required, as defendants argue, by Federal Rule of Civil Procedure 9(b) which requires that "the circumstances constituting fraud ... shall be stated with particularity.” The Third Circuit does not require that allegations of date, place or time be pleaded in order to comport with the rule. "Plaintiffs are free to use alternative means of injecting precision and some measure of substantiation into their allegations of fraud.”
Seville Industrial Machinery Corp. v. Southmost Machinery Corp.,
.
Peters
also states: "A corporate officer, acting
alone
on behalf of the corporation, could not be convicted of conspiring with the corporation.
See United States
v.
Carroll,
.
Novotny
is cited by plaintiffs for the proposition that intracorporate conspiracy may state a cause of action under 42 U.S.C. § 1985(3).
See
Plaintiffs Brief at 39.
Novotny,
however, involved allegations of conspiracy as between various officers of the corporate defendant and not between the corporate defendant and such officers.
. Consolidated Coal moderates its holding by noting that "When separate individual judgments and decisions are capable of being made by both a corporation and one or more of its employees,” then a conspiracy between a corporation and its employees may exist. Presumably, where a person acts solely through or in his capacity for a corporation, Consolidated Coal would bar conspiracy prosecution. Hence, the case is not dissimilar from those cited in the civil realm.
.
Kimmel v. Peterson
states merely that decisions in criminal RICO cases have precedential value in civil RICO cases, with respect to the issue of whether involvement with organized crime must be alleged.
See infra
at 1512-1513 n. 16. It is thus improperly cited for the proposition that the "requirements for stating criminal RICO violations and civil RICO violations áre the same”. Plaintiffs Brief at 39. It is, of course, true that the
elements
to be proven in a civil RICO case are the same as in a criminal RICO prosecution.
See, e.g., Hudson v. LaRouche,
. Those cases holding that, in civil RICO cases, a corporation can conspire with its agent for purposes of section 1962(d) do so not on the ground that civil and criminal RICO should be interpreted alike, as plaintiffs argue, but based upon the courts’ judgment that "RICO should be concerned with intracorporate conspiracies.”
Saine, supra,
It should also be noted that, as in this case,
Callan
found a sufficient conspiracy to exist based upon plaintiffs complaint pleading that the defendant corporation conspired with its “employees, agents
and others." Callan, supra,
. Defendant also hints that the Complaint should be dismissed for failure to allege a nexus between defendant and organized crime,
He
*1513
fendant’s Brief at 64, 68-69, though this is an argument abandoned in Reply and not mentioned at oral argument. It is also a position which has been rejected by every Court of Appeals to have considered it,
see, e.g., Haroco, supra,
.
Sedima
has, of course, been followed by other panels of the Second Circuit,
see Bankers Trust Co. v. Rhoades,
. Professor Blakey, a draftsman of RICO has been criticized for his fervent support of a broad interpretation of the Act and for assuming such an authoritative stance with respect to it.
See Sedima, supra,
. A few courts have held that civil RICO does not protect those who have suffered directly through the operation of a business through a pattern of racketeering, but only those injured as competitors.
See, e.g., Bankers Trust Co. v. Feldesman,
. Title 18 U.S.C. § 1961(4) states "enterprise” includes any individual, partner *1517 ship, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.
The Third Circuit requires that plaintiffs thus prove, though they need not plead,
(1) That the enterprise is an ongoing organization with some sort of framework or superstructure for making or carrying out decisions; (2) that the members of the enterprise function as a continuing unit with established duties; and finally
(3) that the enterprise must be separate and apart from the pattern of racketeering activity in which it engages.
Seville Industrial Machinery, supra,
. Defendant contends in reply, and at oral argument, that even those enterprises claimed to exist by plaintiffs in their brief, cannot possibly set forth an adequate enterprise.
See,
Defendant’s Reply Brief at 31; Transcript of Proceedings at 43-44. The court awaits plaintiffs’ amended complaint, and full briefing by the parties to evaluate this argument. However, the court notes that plaintiff need not plead, only prove, that the enterprise alleged was separate and apart from the pattern of racketeering alleged.
Seville, supra,
. Plaintiffs have also moved to strike the affidavits in support of defendant’s motion. This motion is denied. The Affidavit of Mr. Dwyer helpfully alerts the court to that which it should in any event be aware of; the accuracy of what are mostly public records is never disputed by plaintiffs. Most of the facts in Mr. Rexford’s Affidavit are similarly conceded by plaintiffs: indeed, much of what Mr. Rexford attests to, especially in describing Continental’s benefit program, confirms factual allegations in plaintiffs’ Complaint. The remaining sections, mostly dealing with defendant’s declining financial position, are attested to as a result of personal knowledge or access to company records. The court reads paragraph 1 of the Affidavit as indicating that Mr. Rexford read such records, as he must have to so testify. Nor are any particular records — or any particularly crucial ones—relied on, as in
Peterson v. United States,