The Rico Pattern Requirement in Colorado Federal Courts Since H. J., Inc
| Publication year | 1991 |
| Pages | 1617 |
1991, August, Pg. 1617. The RICO Pattern Requirement in Colorado Federal Courts Since H. J., Inc
The Racketeer Influenced Corrupt Organization Act(fn1) ("RICO") has spawned an array of civil litigation, motivated in part by RICO's provision for treble damages and its broad application to socalled "garden variety" fraud.(fn2) The federal courts have struggled with application of RICO. The U.S. District Court for the District of Colorado ("District Court") and the Tenth Circuit Court of Appeals ("Tenth Circuit") have adopted a number of procedural barriers to RICO claims, including a restrictive approach to RICO's "pattern" requirement.
This article discusses the Colorado federal courts' stance regarding RICO claims and how that stance has been affected by the U.S. Supreme Court's decision in H.J., Inc. v. Northwestern Bell Telephone Co.(fn3)
To make a claim under RICO, the plaintiff adequately must plead and show defendant's (1) conduct of (2) an enterprise through (3) a pattern of (4) racketeering.(fn4) The "pattern" element has proved to be one of the most elusive of the RICO requirements. The District Court and the Tenth Circuit have been particularly restrictive in their interpretation of what constitutes a pattern. Indeed, before H.J., Inc., not a single RICO claim was allowed to proceed past the pleading stage when these two courts addressed the pattern requirement.(fn5) Both courts restricted the pattern element by requiring that the plaintiff plead and show that the alleged predicate acts(fn6) occurred within or during more than one fraudulent "scheme" engaged in by the defendant.(fn7)
Each court (1) expressed concern regarding the "vast and expansive application" of RICO(fn8) and (2) considered the "multiple scheme" requirement to insure that RICO's concern with ongoing criminal activity was served.(fn9) Therefore, in Colorado the plaintiff had to establish that the defendant engaged in predicate acts over a relatively extended period of time and in at least several different instances.(fn10) However, other federal appellate courts have rejected this "multiple scheme" requirement, finding that RICO reaches predicate acts simply when they are related to one another because they are committed by the same defendant within the statutory time period.(fn11)
In H.J., Inc., the U.S. Supreme Court granted certiorari to resolve the conflict.(fn12) The Court held that multiple schemes are not required to satisfy the pattern element of RICO.(fn13) Rather, a plaintiff need only show that the racketeering predicate acts (1) are related and (2) amount to or pose a threat of continued criminal activity.(fn14)
The Court held that prohibited acts are "related" if they
The requirement of "continuity" was described by the Supreme Court as followsembrace[ ] criminal acts that have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.(fn15).
"Continuity" is both a closed- and openended concept, referring either to a closed period of related conduct, or to past conduct that by its nature projects into the future with a threat of repetition...A party alleging a RICO violation may demonstrate continuity over a closed period of time ... [or a] RICO pattern may surely be established if the related predicates themselves involve a distinct threat of long-term racketeering activity, either...
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