Civil Litigation Under the Colorado Organized Crime Control Act - Part Ii - August 2008 - the Civil Litigator

• Publication year: 2008
• Pages: 67

37 Colo.Law. 67 Colorado Lawyer 2008.

2008, August, Pg. 67. Civil Litigation Under the Colorado Organized Crime Control Act - Part II - August 2008 - The Civil Litigator

The Colorado Lawyer
August 2008
Vol. 37, No. 8 [Page 67]

Articles
The Civil Litigator
Civil Litigation Under the Colorado Organized Crime Control Act - Part II
by John W. Mill

The Civil Litigator articles address issues of importance and interest to litigators and trial lawyers practicing in Colorado courts. The Civil Litigator is published six times a year.

Article Editors

Donald Kelso, Denver, of Holme Roberts & Owen LLP - (303) 861-7000, donald.kelso@hro.com; Eric Bentley, Colorado Springs, of Holme Roberts & Owen LLP - (719) 473-3800 eric.bentley@hro.com

About the Author

John W. Mill is a member of Sherman & Howard L.L.C. - (303) 299-8358, jmill@shermanhoward.com. He specializes in civil litigation and construction litigation.

A pattern of racketeering activity and an "enterprise" are essential elements of any claim under the Colorado Organized Crime Control Act (COCCA). Part II of this article addresses the pattern and enterprise elements of a civil claim under COCCA, who has standing to sue under COCCA, civil remedies under COCCA, and the significant differences between COCCA and the federal Racketeer Influenced and Corrupt Organizations Act.

Part I of this article, which was published in the July 2008 issue of The Colorado Lawyer, provided an overview of civil claims under the Colorado Organized Crime Control Act (COCCA);(fn1) discussed the primary COCCA claim alleging that a defendant conducted or participated in an enterprise through a pattern of racketeering activity; summarized the other civil claims under COCCA; and addressed the wide range of criminal conduct, including mail fraud and wire fraud that can constitute racketeering activity under COCCA. This second part discusses the "pattern" and "enterprise" elements of a COCCA claim, the issue of standing, the civil remedies available to a COCCA plaintiff, and the key differences between COCCA and the federal Racketeer Influenced and Corrupt Organizations Act (RICO).(fn2)

The Pattern Requirement

A COCCA claim requires that the defendant or a co-conspirator has engaged in a "pattern" of racketeering activity.(fn3) A single act of racketeering activity is never sufficient to constitute a pattern. COCCA says that "'[p]attern of racketeering activity' means engaging in at least two acts of racketeering activity which are related to the conduct of the enterprise."(fn4) The statute also requires that at least one of the acts of racketeering activity occurred in Colorado after July 1, 1981 (the effective date of COCCA), and that the last act of racketeering activity occurred no more than ten years (excluding any period of imprisonment) after a prior act of racketeering activity.(fn5)

The leading case addressing what constitutes a pattern of racketeering activity under COCCA is People v Chaussee.(fn6) In Chaussee, the Colorado Supreme Court concluded "that the COCCA definition of 'pattern of racketeering activity' is complete and self-contained."(fn7) Thus, the Court held that a "pattern of racketeering activity" under COCCA "can be established . . . simply by proving at least two acts of racketeering activity, as defined in section 18-17-103(5), that are related to the conduct of the enterprise."(fn8)

The Colorado Supreme Court also held that certain requirements established by federal case law for pleading a pattern of racketeering activity under RICO do not apply to COCCA claims.(fn9) This difference between COCCA and RICO is discussed later in this article.(fn10)

The Enterprise

Every COCCA claim requires the existence of an enterprise. The statute defines "enterprise" as follows:

"Enterprise" means any individual, sole proprietorship, partnership, corporation, trust, or other legal entity or any chartered union, association, or group of individuals, associated in fact, although not a legal entity, and shall include illicit as well as licit enterprises and governmental as well as other entities.(fn11)

The plain language of this definition means that a COCCA enterprise can consist of, among other things, one individual,(fn12) one corporation,(fn13) or a group of individuals who are "associated in fact."(fn14) Whatever the enterprise is in a particular case, the plaintiff must be able to define it in the complaint. The enterprise need not be pled with the particularity required by Rule 9(b). However, at least under RICO, conclusory, vague, nonexistent, or speculative allegations of an enterprise will not state a claim.(fn15) The same also should be true under COCCA.

The leading case addressing the requirements for pleading an enterprise under COCCA is People v. James.(fn16) In James, a group of at least seven individuals constituted an associated-in-fact enterprise that engaged in a forged checks scheme.(fn17) The trial court's jury instruction defining "enterprise" tracked the statutory definition.(fn18) The Court of Appeals held that this was proper, but determined that the word "individual" in the statutory definition of "enterprise" is unclear.(fn19) Therefore, the Court of Appeals held that the trial court should have instructed the jury that "the enterprise must have included at least one person or entity besides the defendant."(fn20) In other words, a "defendant alone" cannot constitute an enterprise.(fn21)

This statement appears to be contrary to the plain language of the statutory definition that "[e]nterprise means any individual. . . ."(fn22) However, in the context of an associated-in-fact enterprise consisting of a group of individuals, such as in James, it makes sense that it takes more than one individual to "associate" to form an enterprise.

In James, the Court of Appeals also held that certain requirements established by federal case law for pleading an associated-in-fact enterprise under RICO do not apply to COCCA claims. This difference between COCCA and RICO is discussed later in this article.(fn23)

Standing

COCCA authorizes a civil claim by "[a]ny person injured by reason of any violation of the provisions of section 18-17-104" - that is, any of COCCA's four "prohibited activities."(fn24) A COCCA plaintiff does not need to show that injury resulted from a pattern of racketeering activity.(fn25) Following federal RICO case law, the Colorado Court of Appeals has held that a plaintiff has standing to sue under COCCA "only if that plaintiff has been injured by the conduct constituting the violation."(fn26)

In two cases addressing the issue of standing, the Court of Appeals has articulated what appears to be a two-part test for whether a plaintiff has standing to sue under COCCA. First, the plaintiff must demonstrate that each of the predicate acts constituting the alleged pattern of racketeering activity caused "one or more injuries to someone."(fn27) Second, the plaintiff must show that "one or more of the predicate acts" caused the damages to the plaintiff for which recovery is sought.(fn28) If the predicate acts on which the plaintiff relies to establish a pattern of racketeering activity did not cause any of the plaintiff's damages, the plaintiff lacks standing to sue under COCCA.(fn29)

Civil Remedies

COCCA offers very attractive civil remedies to a prevailing plaintiff. These include treble damages(fn30) and attorney fees.(fn31) A plaintiff also may obtain a temporary restraining order and/or preliminary injunction to enjoin any violation of COCCA.(fn32) A COCCA plaintiff may obtain injunctive relief without establishing irreparable harm.(fn33) In certain circumstances, COCCA plaintiffs have obtained preliminary injunctions early in a case to freeze defendants' assets to prevent their dissipation before a trial on the merits.(fn34)

In addition, COCCA offers a prevailing plaintiff several somewhat unusual remedies, including court orders requiring a defendant to divest any interest in an enterprise or real property,(fn35) requiring the dissolution or reorganization of an enterprise,(fn36) and/or requiring that a Colorado corporation's charter be forfeited or a foreign corporation's certificate of authority to do business in Colorado be revoked under certain circumstances.(fn37) In addition, a prevailing plaintiff may obtain a money judgment for forfeiture of any proceeds derived from any prohibited activity.(fn38)

COCCA's Significant Differences From RICO

COCCA and RICO are similar, but they are not the same. There are several significant differences between the Colorado and federal racketeering statutes. Differences exist in the substantive requirements to plead and prove a civil racketeering claim, and in terms of procedural issues, such as the burden of proof and the statute of limitations. The most significant differences between COCCA and RICO are summarized below.

Pleading a Pattern of Racketeering
Activity is Easier Under COCCA

Under RICO, a pattern of racketeering activity requires at least two predicate acts (1) that are related, and (2) that amount to or pose a threat of continuing criminal activity.(fn39) These requirements are based on RICO's statutory language defining "pattern of racketeering activity."(fn40) The COCCA and RICO definitions of "pattern of racketeering activity" are similar but not identical.(fn41) Under federal case law, the requirement that the predicate acts be related is met if the predicate acts "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."(fn42) The requirement that...