ROMA CONSTRUCTION COMPANY and Peter Zanni, Plaintiffs-Appellants, v. Ralph R. aRUSSO, et al., Defendants-Appellees.
No. 95-2107
United States Court of Appeals, First Circuit.
Heard Feb. 8, 1996. Decided Sept. 27, 1996.
96 F.3d 566
On appeal, Vermont Log says as an alternative final argument that Judge Zobel erred in rejecting its “claim of indemnity” on the ground that “[i]demnity is permitted only where one does not join the negligent act....” We confess ourselves puzzled by Judge Zobel‘s ruling; while the principle may be sound, it is far from clear that Vermont Log‘s culpability in this case—at least on some warranty theories asserted by the Greniers—is of a kind that would automatically preclude an indemnification claim by Vermont Log against DAP and Champion.
Yet even if we assume (dubitante) that Vermont Log has asserted a separate claim for indemnification and assume further that it is not barred from indemnification by its own participation in the wrong, a crucial obstacle remains. The body of doctrine comprising indemnification law varies from state to state; but in Massachusetts, an indemnification claim does require a showing of fault on the part of the parties or parties against whom the demand for indemnification is leveled. Stewart v. Roy Bros., 358 Mass. 446, 265 N.E.2d 357, 365 (1970).
Here, the only allegations of fault made by Vermont Log against DAP and Champion are the charges of negligence and breaches of warranty made in counts III-VI of the amended third-party complaint. We have already found these charges to be inadequate, some because of federal preemption and some because they are both too general and wholly unsupported. And if these claims are themselves inadequate, there is no foundation for a showing of fault as to DAP and Champion that would permit Vermont Log to claim indemnification.
There is a final point to be made that is pertinent to future cases of this kind. Vermont Log has now placed itself in an unhappy position where the Greniers might recover against it while it would no longer have recourse against those who supplied it with Woodlife. This assumes, perhaps fancifully, that the Greniers, or at least the minors, might structure and then prove a claim that managed at the same time to avoid every type of preemption and any kind of defense based on Vermont Log‘s own possible ignorance. But the theoretical risk is there.
This risk arises directly from the entry of a separate final judgment under
But Vermont Log has not made this argument. If it had no objection to the entry of a separate judgment, certainly the district court had no obligation to withhold such a judgment. Indeed, Vermont Log may have had tactical reasons, unknown to us, for allowing the uncoupling of the two complaints. Our sole reason for mentioning the point is to alert district courts in future cases that such an objection to a separate judgment may have significant force.
Affirmed.
G. Robert Blakey, New York City, with whom Ina P. Schiff, Providence, RI, Henry F. Spaloss and Spaloss & Rosson, Nashua, NH, were on brief, for plaintiffs-appellants.
Samuel D. Zurier, with whom Julius C. Michaelson and Michaelson & Michaelson, Providence, RI, were on brief, for defendants-appellees aRusso, et al.
Before TORRUELLA, Chief Judge, and CYR and LYNCH, Circuit Judges.
TORRUELLA, Chief Judge.
Plaintiffs-Appellants Roma Construction Co, Inc. (“Roma“) and Peter Zanni (“Peter Zanni“) (collectively, “the plaintiffs“), challenge the district court‘s dismissal of their claims against Defendants-Appellees Mayor Ralph R. aRusso (“aRusso“), Councilman Benjamin Zanni (“Benjamin Zanni“), Domenic DeConte, Vincent Iannazi, Anthony Izzo, et al. (collectively, “the individual defendants“), and the Town of Johnston, Rhode Island (“the Town“) (together with the individual defendants, “the defendants“). Specifically, the district court granted judgment on the pleadings regarding: (1) Roma‘s racketeering claims against the individual defendants and the Town under the
I. BACKGROUND
We review dismissals pursuant to
Drawing all reasonable inferences for the plaintiffs, the tale proceeds as follows. The plaintiffs Peter Zanni and Roma entered into a real estate development venture with Harry and Russell DePetrillo (“the DePetrillos“). Unknown to the plaintiffs, the DePetrillos had entered into an arrangement with the alleged de facto government of the Town, with aRusso as “the Boss,” under which payments would be made to this enterprise in order to obtain necessary approvals. After the DePetrillos sold their share, Peter Zanni was informed of this preexisting deal, and was warned that his project was “dead” if he did not make payments. Having invested heavily in the project, and reasonably believing that he was dealing with a racketeering enterprise that had extorted and stolen for years during its control of the Town, Peter Zanni paid up. He continued paying for three years, until he was able to sell his share of the development. He then informed the FBI, and cooperated with its investigation and later with prosecutions of official corruption in the Town.
Peter Zanni and Roma brought federal and state civil racketeering claims and federal civil rights claims, charging that they were injured by the conduct of aRusso and his fellow individual defendants, as well as the Town. The district court dismissed these charges on the grounds that the plaintiffs’ own conduct rendered them unable to maintain standing to press their claims. The plaintiffs appeal the dismissals of their racke-
II. DISCUSSION
We address first the plaintiffs’ challenge to the dismissals of their causes of action, and then confront their appeal of the district court‘s decision to deny admission to Blakey.
A. Causes of Action
After setting forth the applicable standard of review, we turn first to the plaintiffs’ challenge to the district court‘s dismissal of their racketeering claims. We then shift to the issue of the plaintiffs’
1. Standard of Review
Upon considering a motion to dismiss for failure to state a claim under
2. The Racketeering Claims
RICO creates a civil remedy for “[a]ny person injured in his business or property by reason of a violation of
The district court dismissed the plaintiffs’ civil RICO claims on the ground that, by their own pleadings, plaintiffs were not innocent victims and therefore could not maintain civil RICO standing. The district court found support for the proposition that only innocent victims could collect damages via civil RICO in the legislative history of the provision. See Organized Crime Control: Hearings on S. 30 Before the Subcomm. No. 5 of the House Committee on the Judiciary, 91st Cong., 2d. Sess. (1970) (stating, in the Act‘s “Findings and Purpose,” that “Congress finds that ... organized crime activity in the United States harms innocent investors and competing organizations“); 116 Cong. Rec. H35,346-47 (Oct. 7, 1970) (statement of Rep. Steiger, the private civil remedy provision‘s sponsor) (“It is the intent of this body, I am certain, to see that innocent parties who are the victims of organized crime have a right to obtain proper redress.“). The district court‘s reasoning can be better delineated in conjunction with a recitation of plaintiffs’ claims. Drawing inferences in favor of the plaintiffs, their pleadings suggest the following situation. The plaintiffs joined the DePetrillos in a real estate venture, unaware that the DePetrillos had entered into a scheme in which regulatory approvals had already been granted in exchange for the DePetrillos’ payment of $10,000 to aRusso and his purported associates. The plaintiffs were similarly unaware that the DePetrillos had agreed to pay an additional $40,000. Several years later, de-
Looking at these contentions, one reasonable conclusion is that the plaintiffs made these payments without any intent or desire to subvert governmental processes, but felt compelled to pay to protect their substantial investment in the venture, and did not contact the FBI until they had mitigated risks to their investment. However, the district court concluded that, even under this favorable view of the plaintiffs’ conduct they could not be considered innocent parties, and so could not, according to the district court‘s interpretation of RICO standing, maintain a civil RICO claim. The district court concluded that, since the plaintiffs’ own pleadings indicate that they paid $40,000 to the individual defendants to assure timely processing of permits and approvals necessary for their project, the plaintiffs were “neither innocent nor victims.” Roma Constr. Co. v. aRusso, 906 F.Supp. 78, 82 (D.R.I.1995).
The plaintiffs challenge the district court‘s dismissal of their civil RICO claims on the pleadings. Plaintiffs dispute that there is any “innocent party” requirement under RICO. In the alternative, the plaintiffs contend that, even assuming such an “innocent party” requirement, the district court erred as a matter of law in concluding, that even taking the most favorable view of the plaintiffs’ pleadings, they were necessarily not “innocent parties.” Although the district court spoke of the “innocent party” requirement as one of “standing,” it appears to have also considered its “innocent party” requirement as being in the nature of an affirmative defense which could be determined at the pleadings stage. The district court analogized to antitrust cases under the
Our analysis commences with an examination of the standards under which the district court evaluated plaintiffs’ behavior. In deciding that such payments, even if coerced, forced it to conclude that the plaintiffs were
[n]o person shall corruptly give ... any gift or valuable consideration to ... any public official as an inducement or reward for doing or forebearing to do ... any act in relation to the business of ... the state, city or town of which he or she is an official.
Rather, the district court drew on the commentary to the Model Penal Code‘s definition of bribery to conclude that the plaintiffs’ payments, even if construed to be the product of coercion, constituted illegal bribery. See Roma Constr. Co., 906 F.Supp. at 81. The cited commentary to
[a] private citizen who responds to an official‘s threat of adverse action by paying money to secure more favorable treatment evidences thereby a willingness to subvert the legitimate processes of government.... Such conduct constitutes a degree of cooperation in the undermining of governmental integrity that is inconsistent with the complete exoneration from criminal liability.
Model Penal Code § 240.1 commentary at 41 (1980). The district court thus concluded that since even the interpretation of the pleadings that most favors the plaintiffs requires a determination that plaintiffs capitulated to official threats of adverse action, they were not “innocent parties.” Taken together with its reading of the legislative history that RICO was intended to protect “innocent parties” and with its assessment of public policy in the form of “economic incentives,” the district court proceeded to dismiss the plaintiffs’ claims on the pleadings. Roma Constr. Co., 906 F.Supp. at 83.
The district court thus ultimately relied on the policy concerns it understood to be addressed in the Model Penal Code. Assuming for the sake of argument that lack of “innocence” is an issue in a civil RICO claim, the question must be addressed whether the district court considered the correct sources for the definition of “innocence.” We believe that where racketeering statutes provide for a civil remedy, at the very least we should deny RICO remedies only with reference to statutes or case law, not on policy grounds. See generally Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 498-500, 105 S.Ct. 3275, 3285-87, 87 L.Ed.2d 346 (1985) (rejecting, due to RICO statutory language and legislative history that counsel a broad interpretation, a court of appeals-imposed RICO standing limitation as inappropriate judicial “statutory amendment” even though the Court shared the lower court‘s concerns about “extraordinary” uses of RICO). As a result, we turn to the question of whether the issue presented is properly one of federal common law for which the Model Penal Code might prove a legitimate source of uniform legal principles, or one to which we would apply Rhode Island law.
The Supreme Court has recognized that federal courts have the power to formulate federal common law when a federal rule of decision is necessary to protect “uniquely federal interests” or when Congress has given the courts the power to develop substantive law. Texas Indus. v. Radcliff Materials, Inc., 451 U.S. 630, 640, 101 S.Ct. 2061, 2066-67, 68 L.Ed.2d 500 (1981) (citing Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 426, 84 S.Ct. 923, 939, 11 L.Ed.2d 804 (1964) and Wheeldin v. Wheeler, 373 U.S. 647, 652, 83 S.Ct. 1441, 1445-46, 10 L.Ed.2d 605 (1963)). Areas of “uniquely federal interests” include areas such as “the rights and obligations of the United States, interstate and international disputes implicating the conflicting rights of States or our relations with foreign nations, and admiralty cases.” Id. at 641, 101 S.Ct. at 2067. Several courts have concluded that RICO does not implicate “uniquely federal interests,” since “[r]egulation of organized crime does not fall within the above categories and, although RICO is federal leg-
As a result, we inquire whether the question presented—is RICO standing limited to “innocent” parties?—falls within an area in which Congress has given the courts the power to develop substantive law. Texas Industries, 451 U.S. at 640, 101 S.Ct. at 2066-67. The district court, in effect, decided that the issue of federal civil RICO standing and its relationship to a party‘s innocence was properly decided as a matter of uniform federal common law. The district court looked to uniform model codes and emergent trends as guides for fashioning a federal common law rule which would foster what it perceived as important federal interests underlying civil RICO. The district court suggested that the Congress that enacted RICO in 1970, which referred obliquely in legislative history to the purpose of aiding “innocent parties,” would be cognizant of the emerging Model Penal Code trend in the law of bribery, presupposing that Congress gave courts the power to develop substantive law regarding this issue.
We find no evidence of any congressional intent that the “innocence” of a RICO “victim” should be made to turn on a uniform federal common law rule. Neither party cites, and we have been unable to find, statutory provisions or legislative history evidencing such a grant of authority. While there has been a great deal of commentary regarding the appropriate scope of federal common law, see, e.g., Morgan v. South Bend Community Sch. Corp., 797 F.2d 471, 475 (7th Cir.1986) (collecting commentary), it is not disputed that “when the federal government is not a party to the litigation“—as is the case here—“neutral state rules that do not undermine federal interests should be applied unless some statute (or the Constitution) authorizes the federal court[s] to create a rule of federal law,” id. at 475 (citing Miree v. DeKalb County, 433 U.S. 25, 28-33, 97 S.Ct. 2490, 2493-96, 53 L.Ed.2d 557 (1977)). More specifically, the Supreme Court has rejected a judicially created restriction on RICO standing, despite voicing agreement with the policy concerns that drove the limitation in question. See Sedima, 473 U.S. at 498-500, 105 S.Ct. at 3285-87. As a result, assuming—without concluding, as we ultimately find the plaintiffs to be innocent parties—that RICO standing is limited to “innocent parties,” we believe that the question of a party‘s innocence must be resolved via the incorporation of state law into the federal law of RICO standing in order to answer the instant question. We recognize that the incorporation of state law into federal law implicates a serious problem of uniformity of federal law throughout the states. However, since RICO does not implicate uniquely federal interests and since there is a lack of support for the view that Congress authorized the federal courts to generate federal common law in this area, the incorporation of state law is the preferable alternative. See, e.g., In re Sunrise Sec. Litig., 916 F.2d 874, 881 (3d Cir.1990) (finding it appropriate “to look to state law for guidance in deciding whether plaintiffs have stated a nonderivative [shareholders‘] claim, [enabling them to maintain standing,] rather than to fashion federal common law“); Leach v. Federal Deposit Ins. Corp., 860 F.2d 1266, 1274 (5th Cir.1988) (concluding that “the incorporation of state law to determine whether a shareholder has been injured under RICO is preferable to generating federal common law” despite the possibility of “a serious problem of uniformity of federal law throughout the states“); cf. In re Bieter Co., 16 F.3d 929, 935 (8th Cir.1994) (applying federal common law of attorney-client privilege to a civil RICO action, where such application is authorized by Supreme Court Standard 503 and Supreme Court case law).
As a result, in assessing plaintiffs’ innocence, we must apply Rhode Island bribery law. The district court concluded that the pleadings rendered the plaintiffs “not inno-
[a] person is guilty of bribery, a felony of the third degree, if he offers, confers, or agrees to confer upon another, or solicits, accepts or agrees to accept from another:
- any pecuniary benefit as consideration for the recipient‘s decision, opinion, recommendation, vote or other exercise of discretion as a public servant, party official, or voter; or
- any benefit as consideration for the recipient‘s decision, vote, recommendation or other exercise of official discretion in a judicial or administrative proceeding; or
- any benefit as consideration for a violation of a known legal duty as a public servant or party official.
Model Penal Code § 240.1 (“Bribery in Official and Political Matters“). While the district court may have rightly concluded that the plaintiffs are not innocent of bribery under the Model Penal Code, we do not think that this fact counsels for the same conclusion under Rhode Island law, since the Code‘s own commentaries expressly recognize that the Code does not follow Rhode Island law. Part II Model Penal Code and Commentaries 6, n.2 (1980). Moreover, un-
The plaintiffs argue that the Model Penal Code‘s omission of the term “corruptly” is no mere semantic distinction; rather, it represents a shift from the common law in expanding the scope of bribery sanctions for payors to situations in which the payor does not act corruptly. See generally James Lindgren, The Elusive Distinction Between Bribery and Extortion: From the Common Law to the Hobbs Act, 35 U.C.L.A. L.Rev. 815, 824 n.41 (1988). We agree. “[A] statutory term is generally presumed to have its common-law meaning.” Evans v. United States, 504 U.S. 255, 259, 112 S.Ct. 1881, 1885, 119 L.Ed.2d 57 (1992); United States v. Aguilar, 515 U.S. 593, 115 S.Ct. 2357, 2370, 132 L.Ed.2d 520 (1995) (Scalia, J., dissenting) (stating that “the term ‘corruptly’ in criminal laws has a long-standing and well-accepted meaning“). The term “corruptly” adds the element of corrupt intent to the crime of bribery. See generally id. at 2370 (endorsing the proposition that “[a]n act is done corruptly if it‘s done voluntarily and intentionally to bring about either an unlawful result or a lawful result by some unlawful method, with a hope or expectation of either financial gain or other benefit to oneself or a benefit of another person“); H.R. 748, 87th Cong., 1st Sess. 18 (1961) (reporting
We agree that the term “corruptly” indicates a specific corrupt intent that differs from the Model Penal Code commentary‘s condemnation of an involuntary payor‘s conduct as manifesting “a degree of cooperation in the undermining of governmental integrity that is inconsistent with the complete exoneration from criminal liability.” Model Penal Code § 240.1 commentary at 41. The mens rea implicated by “corruptly” concerns the intention to obtain ill-gotten gain; by contrast, the Model Penal Code converts the lack of willpower to stand up to abusive authority into a degree of culpability. See Lindgren, supra at 824 n. 41 (stating that “[t]he Model Penal Code has taken the questionable approach of making it bribery to capitulate to an extortion threat“). Admittedly, to delve into questions of what is done “corruptly” is more difficult than to apply the Model Penal Code‘s standard. But as one commentator has noted, “[t]he best that can be said for the [Model Penal Code‘s bribery] provision is that it makes difficult questions of crime definition easy, but this clarity is bought at the cost of ignoring the settled law of centuries and current notions of right and wrong.” Id.
As a result, we must apply the common law standard of specific corrupt intent, as included in the Rhode Island statute, to the plaintiffs’ story. The plaintiffs claim that they paid only to avoid adverse consequences, that their properties met the standards required for the approvals in question, and that they received nothing beyond fair treatment from payees. Examining these claims with an eye towards detecting corrupt intent, we think that a set of facts could be found from which it could be reasonably inferred that the plaintiffs did not make payments voluntarily to bring about an unlawful result, with the hope of a gain for themselves, but rather that they were the innocent victims of a criminal enterprise. As a result, we conclude that Rhode Island‘s bribery statute does not foreclose a conclusion that they are “innocent parties.”
Citing United States v. Mariano, 983 F.2d 1150, 1159 (1st Cir.1993) and United States v. Hathaway, 534 F.2d 386, 395 (1st Cir.1976), the defendants assert that we have previously held that “bribery and extortion are not mutually exclusive concepts,” Mariano, 983 F.2d at 1159; Hathaway, 534 F.2d at 395. However, we think these cases unavailing for three reasons. First, neither deals with Rhode Island‘s bribery statute. Second, even if these cases compelled us to conclude that bribery and coercive extortion are not mutually exclusive concepts under the Rhodes Island statute, in the instant case a genuine issue of material fact remains as to the plaintiffs’ intent in making payments, based on a reading of the pleadings in the best light for the plaintiffs.
Third, and finally, Mariano, at least, involved two defendants who pled guilty to “corruptly giv[ing] ... [some]thing of value” to local government officials “with intent to influence or reward” those officials, where the officials were part of a governmental unit that received substantial federal subsidies, in violation of
In this case, the district court improperly dismissed the plaintiffs’ case before it had a chance to swallow, let alone digest, their story. At this stage of the game, since one plausible view is that the plaintiffs were in fact victims of coercive extortion, and since they have not pled guilty to a crime that involves “corrupt intent” as an element as we noted of the defendants in Mariano, 983 F.2d at 1159, we conclude that the plaintiffs in the instant case may press on with their claim. As a result, we reverse the district court‘s dismissal of the plaintiffs’ federal RICO claims. Accordingly, we also reverse the district court‘s dismissal for lack of supplemental jurisdiction, see
Because we conclude that even if RICO‘S civil remedies were limited to innocent parties, we would apply Rhode Island law to the question of the plaintiffs’ innocence, and Rhode Island law compels a reversal of the district court‘s dismissal of their claims, we leave for a later time the question of whether those who are not innocent parties can be denied civil RICO remedies.
3. The Civil Rights Claim
The district court also dismissed the plaintiffs’ claim that the individual defendants and the Town acted under color of state authority and municipal practice, and deprived the plaintiffs of property and rights in violation of
Congress included customs and usages [in
section 1983 ] because of the persistent and widespread discriminatory practices of state officials.... Although not authorized by written law, such practices of state officials could well be so permanent and well settled as to constitute a “custom or usage” with the force of law.
Monell v. Department of Social Servs. of New York, 436 U.S. 658, 691, 98 S.Ct. 2018, 2036, 56 L.Ed.2d 611 (1978) (quoting Adickes v. S.H. Kress & Co., 398 U.S. 144, 167-68, 90 S.Ct. 1598, 1613-14, 26 L.Ed.2d 142 (1970)); see Bordanaro v. McLeod, 871 F.2d 1151, 1156 (1st Cir.1989).
Courts have set forth two requirements for maintaining a
The district court concluded that in the facts alleged, “there [was] no evidence that the Town [] had any policy endorsing or advocating extortion and the acceptance of bribes by town officials.” Roma Constr. Co., 906 F.Supp. at 83. Furthermore, the district court went on to state that, even assuming “that there was a de facto municipal policy of extortion promulgated by aRusso and perpetrated by the other named defendants,” the plaintiffs could not succeed in their
For the reasons we have stated in our discussion regarding bribery and coercive extortion, we think a finder of fact could reasonably infer that the plaintiffs’ payments were made pursuant to coercive extortion, and thus did not necessarily constitute “voluntary payment of bribes” with corrupt intent. At this stage, we must resolve reasonable inferences in favor of the plaintiffs. Thus, we conclude that the plaintiffs could show a direct causal link between the defendants’ coercive extortion and the plaintiffs’ losses.
As a result, we turn to the question of whether coercive extortion, if found, could be attributed to some de facto municipal policy. “An unconstitutional policy or custom may be inferred from a single decision or act ... [but] the isolated action must be taken by a municipal official with ‘final policy-making authority’ in the relevant area of the city‘s business.” Rodríguez v. Furtado, 771 F.Supp. 1245, 1257 (D.Mass.1991) (citations omitted). However, “[t]he fact that a particular official—even a policymaking official—has discretion in the exercise of a particular function does not, without more, give rise to municipal liability based on an exercise of that discretion.” Pembaur v. City of Cincinnati, 475 U.S. 469, 481-82, 106 S.Ct. 1292, 1299, 89 L.Ed.2d 452 (1986) (Brennan, J., plurality opinion).
In their pleadings, the plaintiffs have alleged that aRusso as Mayor, Benjamin Zanni as a town councilman, and others operated a de facto government which controlled the Town for more than a decade, routinely engaging in bribery, extortion, corruption and other unlawful activities. While a showing that aRusso acted illegally in the exercise of his discretion as Mayor might not by itself give rise to municipal liability, we think that under these pleadings, the plaintiffs could indeed prove a set of facts from which a trier of fact could infer an unconstitutional policy or custom with respect to the Town‘s government. For example, a fact finder could conclude that extortion of outsiders, businessmen, or developers, if proven, was “the way things are done and have been done” in the Town. See Kibbe v. City of Springfield, 777 F.2d 801, 806 (1st Cir.1985) (quoting Grandstaff v. City of Borger, 767 F.2d 161, 171 (5th Cir.1985), cert. denied, 480 U.S. 916, 107 S.Ct. 1369, 94 L.Ed.2d 686 (1987)), cert. granted, 475 U.S. 1064, 106 S.Ct. 1374, 89 L.Ed.2d 600 (1986), cert. dismissed, 480 U.S. 257, 107 S.Ct. 1114, 94 L.Ed.2d 293 (1987). As a result, we reverse the district court‘s dismissal of the plaintiffs’
B. Blakey‘s Pro Hac Vice Admission
The plaintiffs also appeal the district court‘s denial of admission pro hac vice of their attorney, G. Robert Blakey (“Blakey“). On May 15, 1995, the plaintiffs moved for Blakey‘s admission pro hac vice. The district court denied the motion on June 2, 1995. On June 12, 1995, the plaintiffs moved for reconsideration of the court‘s order; the district court denied the motion for reconsideration on September 25, 1995.
The district court articulated two grounds for denying Blakey‘s pro hac vice admission. First, the district court noted that a previous motion by the plaintiffs seeking the admission pro hac vice of another of their attorneys, Spaloss, had already been granted. Second, the district court expressed concern about the amount of attorney‘s fees being generated by the plaintiffs.5
The Supreme Court has recognized that “in many District Courts, the decision on whether to grant pro hac vice status to an out-of-state attorney is purely discretionary.”
[a]ny attorney who is a member in good standing of the bar of the United States Supreme Court, of any other United States District court, or of the highest court of any state, shall on motion be permitted to appear once in a calendar year in a case or group of related cases in association with a member of the bar of this court who is actively engaged in the practice of law within the State of Rhode Island....
D.R.I. R. 5(c) (emphasis added). The plaintiffs argue that in contrast to the Local Rules of the other districts in this circuit, Rhode Island‘s rule does not by its terms provide for the court‘s discretion. Compare D.R.I. R. 5(c) (“shall on motion be permitted to appear“) with D. Me. R. 3(d)(1) (“may at the discretion of the Court ... be permitted to practice“); D. Mass. R. 6(b) (“may appear and practice in this court in a particular case by leave granted in the discretion of the court“); D.N.H. R. 5(b) (“may at the discretion of the court“); D.P.R. R. 204.2 (“may be permitted“). The plaintiffs assert that the District of Rhode Island has promulgated a rule under whose clear language pro hac vice admission is not discretionary. As a result, the plaintiffs claim, the district court erred as a matter of law in concluding that it had discretion to deny Blakey‘s pro hac vice admission, or alternatively, the district court abused whatever discretion it had.
We do not consider the issue of whether this pro hac vice rule, which may be nondiscretionary, nonetheless leaves some discretion to deny admission. Even assuming that discretion existed, the district court‘s denial of such admission to Blakey was an abuse of that discretion. The district court‘s two articulated grounds simply cannot support its action. The district court stated that “[w]e already have one pro hac vice ... [and we‘re] not going to take more than one on a case.” We may take judicial notice of the fact that the District of Rhode Island has permitted multiple pro hac vice admissions in proceedings that were contemporaneous with the instant case. See Cohen v. Brown Univ., 879 F.Supp. 185 (D.R.I.1995). Furthermore, regarding expense, in the instant case defendants were represented by more than ten attorneys, the plaintiffs by two; additionally, if the court was concerned about excessive attorney fees, it could have addressed that matter later, if and when the plaintiffs submitted their attorney fee application.
While it may be that Blakey has no right to pro hac vice admission, see Leis v. Flynt, 439 U.S. 438, 452, 99 S.Ct. 698, 705-06, 58 L.Ed.2d 717 (1979) (holding that an attorney does not have a federal right to state court pro hac vice admission), the rights of the plaintiffs are another matter. Particularly here, where the plaintiffs identified specific, logical reasons for their request,6 we conclude that the district court‘s decision, based on criteria that are not set forth in writing, that do not reasonably support its action, and that do not appear to respond to any general policy of the District of Rhode Island, amounts to an abuse of discretion.
CONCLUSION
As a result of the foregoing, the judgment of the district court is reversed. Appellants are allowed costs.
LYNCH, Circuit Judge, concurring.
At issue is whether the plaintiffs have stated a claim under
The question of who has standing to bring actions under RICO is a matter of federal law. The pertinent provision of RICO provides:
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 the suit, including a reasonable attorney‘s fee.
In general, the intent of Congress manifested in the text of the statute governs the issue of standing:
In determining the scope of a statute, we look first to its language. If the statutory language is unambiguous, in the absence of “a clearly expressed legislative intent to the contrary, that language must ordinarily be regarded as conclusive.”
United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981) (quoting Consumer Product Safety Comm‘n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980)). The language of RICO should thus be the primary guide to determining Congressional intent. See Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479, 495 n. 13, 105 S.Ct. 3275, 3284 n. 13, 87 L.Ed.2d 346 (1985). Indeed, the Supreme Court has consistently adhered to the language of RICO in interpreting its meaning and rejected surplus requirements not found in the statutory language. See, e.g., Scheidler, 510 U.S. at 261-63, 114 S.Ct. at 806 (holding that RICO does not require an economic motive behind the racketeering activity); Reves v. Ernst & Young, 507 U.S. 170, 177-79, 113 S.Ct. 1163, 1169-70, 122 L.Ed.2d 525 (1993) (looking to statutory language to determine the scope of RICO liability for “conduct” or “participation“); Sedima, 473 U.S. at 488-92, 105 S.Ct. at 3280-83 (holding that private actions under RICO do not require a criminal conviction on the underlying predicate offenses); Turkette, 452 U.S. at 580-87, 101 S.Ct. at 2527-31 (holding that the term “enterprise” as used in RICO is not restricted to criminal enterprises); cf. Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 265-69, 112 S.Ct. 1311, 1316-18, 117 L.Ed.2d 532 (1992) (construing the word “injury” to require proximate cause by reference to statutory history and judicial interpretation of same language in Clayton Act).
Despite the lack of any “innocent victim” requirement in the statutory language, the district court relied upon an isolated statement in the legislative history to fashion a requirement that only “innocent victims” be allowed to sue. The district court‘s reliance on a snippet of legislative history, lifted out of context,9 to create an absolute standing
bar to anyone not “innocent,” was inappropriate. “[E]ven if we were to read this statement to say what [defendants] say[] it means, it would not amount to more than background noise drowned out by the statutory language.” Holmes, 503 U.S. at 269 n. 15, 112 S.Ct. at 1318 n. 15. This selection from the legislative history cannot overcome the plain text of RICO, which is unambiguous. It represents “a rather thin reed upon which to base a requirement ... neither expressed nor ... fairly implied in the operative sections of [RICO].” Scheidler, 510 U.S. at 260, 114 S.Ct. at 805. Even were there occasion to consider the legislative history relied upon by the district court, it says only that the statute will protect innocent victims, not that the statute will deny standing to those who are not innocent victims. See Turkette, 452 U.S. at 591, 101 S.Ct. at 2533 (noting that “negative inference[s]” need not be drawn from positive statements in legislative history).
The Supreme Court has emphasized the broad reach of RICO‘s language: “If the defendant engages in a pattern of racketeering activity ... and the racketeering activities injure the plaintiff in his business or property, the plaintiff has a claim under § 1964(c). There is no room in the statutory language for an additional ... requirement.” Sedima, 473 U.S. at 495, 105 S.Ct. at 3284. There is nothing in the language of RICO which suggests that Congress intended to deny standing to plaintiffs who are alleged to have committed bribery or paid extortion, whether under coercion or not.
Standing involves three analytically distinct requirements: injury-in-fact, a causal connection between the injury and the conduct complained of, and whether the wrong may be redressed. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 2136-37, 119 L.Ed.2d 351 (1992). All three elements of the standing inquiry are satisfied on the pleadings here. Plaintiffs have adequately alleged injury-in-fact (financial loss), a causal connection (defendants’ corruptly demanding payments), and that the injury will be redressed by a favorable decision (availability of RICO damages). See Sedima, 473 U.S. at 496, 105 S.Ct. at 3285 (noting that RICO plaintiff has standing only if “he has been injured in his business or property by the conduct constituting the violation“); Libertad v. Welch, 53 F.3d 428, 436 (1st Cir.1995). This is not a case where the plaintiffs attempt to assert the rights of others. Cf. Carter v. Berger, 777 F.2d 1173 (7th Cir.1985) (county, not individual taxpayers, may sue under RICO for bribery scheme resulting in underpayment of taxes). Accordingly, I would end the standing analysis there.
In considering whether there is an “innocent victim” standing requirement, I doubt that Congress intended for the federal courts to refer to and incorporate state law.10 The
Although RICO references state law in its definition of “racketeering activity,”12 it makes no substantive distinction between “bribery” and “extortion.” RICO defines “racketeering activity” in
The labels placed on a state statute do not determine whether that statute proscribes bribery for purposes of the RICO statute. Congress intended for “bribery” to be defined generically when it included bribery as a predicate act. H.R.Rep. No. 1549, 91st Cong., 2d Sess. (1970), reprinted in 1970 U.S.Code Cong. & Admin. News 4007, 4032 (“State offenses are included by generic designation.“). Thus, any statute that proscribes conduct which could be generically defined as bribery can be the basis for a predicate act.
United States v. Garner, 837 F.2d 1404, 1418 (7th Cir.1987), cert. denied, 486 U.S. 1035, 108 S.Ct. 2022, 100 L.Ed.2d 608 (1988); accord United States v. Forsythe, 560 F.2d 1127, 1137 (3d Cir.1977). Here, the plaintiffs’ complaint also alleges, in addition to the state law predicate offense, a predicate federal offense, violation of
Nonetheless, standing issues aside, the question remains whether there is some form of requirement in RICO, which may be tested on a motion to dismiss, that plaintiffs be innocent victims. At least two other possibilities emerge: that such a requirement is inherent in the cause of action or that it is an affirmative defense.
To the extent that the existence of a cause of action is a matter analytically distinct from the issue of standing, see Libertad, 53 F.3d at 438 n. 5, a cause of action has been stated here.13 There is nothing in the language of RICO which suggests that only innocent plaintiffs have a cause of action. See Scheidler, 510 U.S. at 261, 114 S.Ct. at 806 (“[T]he statutory language is unambiguous and [the] legislative history [evidences] no such ‘clearly expressed legislative intent to the contrary that would warrant a different construction.‘” (citation omitted)). Under the proximate causation test of Holmes, 503 U.S. at 268, 112 S.Ct. at 1317-18, there is a cause of action stated.14 The damages alleged here on the
The district court opinion also suggests that the “innocent victim” argument may be available as an affirmative defense. If so, there are a range of possibilities for the contours of the defense. The range includes a sort of absolute defense if the plaintiff has done anything wrong, which is what the district court thought and to which it applied the label of an in pari delicto defense.15 At the other end of the range is the position that the relative guilt of the plaintiff is irrelevant. That, I believe, cannot be so,16 and even the plaintiffs do not argue that position. While some affirmative defenses, such as the statute of limitations, may on occasion be decided on the pleadings, the assertion of an affirmative defense here would not afford a basis to dismiss the complaint under
I would reject the proposition, urged by defendants, that an absolute in pari delicto defense is embedded in RICO. In construing the language of RICO, the Supreme Court has looked to precedent under the
That there is no in pari delicto defense does not mean there is no defense at all in which the relative guilt of the plaintiffs may be weighed. It is far more likely that there is in RICO an “equal involvement” defense similar to the “equal involvement” defense recognized under the Clayton Act in Perma Life.17 Recognition of such a defense, patterned on the Clayton Act defense, was extended to securities actions in Bateman Eichler, 472 U.S. at 306-11, 105 S.Ct. at 2626-29. The equal involvement defense is more demanding of those asserting it than the in pari delicto defense and only bars the claims of a plaintiff who “truly bore at least substantially equal responsibility [as the defendant] for the violation” of the federal law at issue. Id. at 308, 105 S.Ct. at 2628.
This circuit has also recognized an equal involvement defense in antitrust actions. Sullivan, 34 F.3d at 1107 (“A plaintiff‘s ‘complete, voluntary, and substantially equal participation’ in an illegal practice under the antitrust laws precludes recovery for that antitrust violation.” (quoting CVD, Inc. v. Raytheon Co., 769 F.2d 842, 856 (1st Cir.1985), cert. denied, 475 U.S. 1016, 106 S.Ct. 1198, 89 L.Ed.2d 312 (1986))).
Testing the allegations of the complaint against the Supreme Court‘s articulation of the equal involvement defense, this complaint survives a
a private action for damages ... may be barred on the grounds of the plaintiff‘s own culpability only where (1) as a direct result of his own actions, the plaintiff bears at least substantially equal responsibility for the violations he seeks to redress, and (2) preclusion of suit would not significantly interfere with the effective enforcement of [RICO] and the protection of the public.
Bateman, 472 U.S. at 310-11, 105 S.Ct. at 2629. Both the Supreme Court and this court have cautioned against deciding such defenses in the absence of factual development. See id. at 311 n. 21, 105 S.Ct. at 2629 n. 21 (“We note, however, the inappropriateness of resolving the question of respondents’ fault solely on the basis of the allegations set forth in the complaint.“); Sullivan, 34 F.3d at 1109 (“Ultimately ... these are factual questions for the jury....“).
The defendants make a misplaced attempt to argue in favor of the more defendant-helpful in pari delicto defense by relying on Tafflin v. Levitt, 493 U.S. 455, 110 S.Ct. 792, 107 L.Ed.2d 887 (1990). Tafflin, they urge, weakens the analogy of RICO to the
Similarly, there is no comfort for defendants in the Supreme Court‘s rejection in Sedima of application of the “antitrust injury” rule to RICO. “[T]his is so because ‘RICO injury’ would [otherwise] be an unintelligible requirement, not because there is no parallel between the two statutes.” Carter v. Berger, 777 F.2d 1173, 1176 (7th Cir.1985) (noting the Court‘s remark in Sedima, 473 U.S. at 489-90 & n. 8, 105 S.Ct. at 3281-83 & n. 8, that Congress relied on the analogy to antitrust).
Indeed, RICO was enacted in 1970, after the Perma Life decision, of which Congress was undoubtedly aware. The modelling of RICO on the
But defendants do have a point. The analogy to the
I very much doubt that the federal definition of “innocence” for purposes of the equal involvement defense would ordinarily involve reference to and incorporation of state law, as the majority asserts.18 The Supreme Court did not look to state law to define the defense in either Perma Life or Bateman, nor should we do so here. Nor has this court looked to state law to define the defense under the Clayton Act in the aftermath of Perma Life.
To say there is some form of affirmative defense like the equal involvement defense does not describe precisely the content of such a defense. Even the Supreme Court Justices in Perma Life did not agree on the content. See supra footnote 17. In the absence of factual findings in which to set the questions of the honing of such a defense, there is, and should be, reluctance to engage now in such refinement. The precision of any standard awaits further development. It is enough now to say that the positions at the extremities—that any wrongdoing disables a plaintiff or that wrongdoing is irrelevant—are untenable.
The equal involvement defense recognized under the Clayton Act and the Securities Act derives its contours from federal policy as recognized by federal statutes. There is no reason not to apply that paradigm to RICO.19
SANDRA L. LYNCH
UNITED STATES CIRCUIT JUDGE
Notes
Further, Representative Steiger referred, in the very same remarks relied upon by the district court, to victims of “organized crime.” Yet it was clear to both the House and the Senate that the reach of civil RICO extended well beyond organized crime. “Congress knew what it was doing when it adopted commodious language capable of extending beyond organized crime.” H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 246, 109 S.Ct. 2893, 2904, 106 L.Ed.2d 195 (1989); see also Sedima, 473 U.S. at 499, 105 S.Ct. at 3286 (“Congress wanted to reach both ‘legitimate’ and ‘illegitimate’ enterprises. The former enjoy neither an inherent incapacity for criminal activity nor immunity from its consequences. The fact that § 1964(c) is used against respected businesses allegedly engaged in a pattern of specifically identified criminal conduct is hardly a sufficient reason for assuming that the provision is being misconstrued.” (citation omitted)); Abrams, supra, § 1.1, at 5 (“RICO‘s name might suggest that the private cause of action reaches primarily racketeers and other organized crime figures. Developments since RICO‘s 1970 enactment, however, have laid firmly to rest any suggestion of limited reach.“).