RICO claims: the challenge of alleging the "pattern" element.

• Author: Walker, Karen D.
• Position: Racketeer Influenced and Corrupt Organizations Act - Federal and state civil RICO claims in commercial disputes

The federal RICO legislation originated with Congress' resolve to give law enforcement adequate tools to deal with "organized crime." In the decades following the enactment of that legislation, law enforcement authorities, as expected, have made good and effective use of RICO. What was unexpected, though, was that federal and state civil RICO claims would become commonplace in commercial disputes and that courts would be called on to apply RICO principles to business activities having no connection at all to organized crime as those activities were commonly understood when RICO was enacted.

The allure of RICO claims for plaintiffs is understandable: These claims offer expanded remedies (including treble damages) and the opportunity to put before the trier of fact conduct that is often completely unrelated to the conduct causing the injury and which would not be relevant to most common law and statutory claims. To state a civil RICO claim, a plaintiff must allege that the defendant has engaged in a "pattern" of misconduct (called "racketeering" under the RICO statutes). The "pattern" element often presents the biggest challenge to a plaintiff in stating a civil RICO claim because it requires the plaintiff to show some ongoing threat of criminal activity. When a RICO claim is based not only on the conduct causing injury, but also on conduct which may have occurred many years before, it is difficult to show that this conduct will project into the future. This article will address the specific requirements to properly allege the pattern element of a civil RICO claim.

The federal and Florida RICO statutes, and the accompanying Florida Civil Remedies for Criminal Practices Act, impose civil liability on persons who conduct or participate in an enterprise through a "pattern of racketeering activity." "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." (1)

The "racketeering activity" described in these statutes must consist of two or more federal (or state) criminal offenses, known as "predicate acts," committed within a 10-year period for federal RICO, or a five-year period for Florida RICO. (2) A "pattern" of racketeering activity is sufficiently alleged only if there is "continuity plus relationship" between those predicate acts. (3) This can be expressed diagrammatically as follows:

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As shown, the "relationship" factor of the pattern requirement means that the predicate acts must be connected to one another. (4) The "continuity" factor of the pattern requirement means "that the predicates themselves amount to, ... or otherwise constitute a threat of, continuing racketeering activity." (5) It is the continuity requirement that frequently proves most challenging to a plaintiff asserting a civil RICO claim.

This continuity requirement is adequately pled only where the plaintiff has alleged either "closed-ended continuity" or "open-ended continuity":

"Continuity" is both a closed- and open-ended concept, referring either to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition. It is, in either case, centrally a temporal concept--and particularly so in the RICO context, where what must be...