Most people associate the word ”racketeering” with the Mafia or other organized crime entities. However, the Racketeer Influenced and Corrupt Organization Act (RICO), both the federal and Georgia versions, span more than just situations involving organized crime. People can bring civil RICO lawsuits for a variety of reasons. The law is often overused, but any civil RICO claim is something your business should take very seriously because, if the plaintiff succeeds, your business could be forced to pay “treble damages,” which means a plaintiff’s award that is triple the amount of damages actually proved. Fortunately, there are many ways that a skilled Georgia civil racketeering attorney can defeat an improper civil RICO case launched against your business.
If you are on the defendant side of a civil RICO lawsuit, you should know that there are a significant number of pleading and proof requirements the law imposes on plaintiffs. This gives your knowledgeable attorney many opportunities to obtain a summary judgment that throws out the RICO claim before it ever makes it to trial.
As an example, we can look at a federal court case that started right here in North Georgia. The plaintiff, R.C., was a customer who bought a puppy at a Kennesaw pet store. She paid $2,400 for her Shih Tzu after receiving paperwork certifying that the dog was healthy. The dog wasn’t. A veterinarian diagnosed the puppy with parvovirus, which is often fatal in puppies.
Less than a week after R.C. took her puppy home, he died. This led the woman to sue the pet store chain, its network of “preferred” veterinarians, and several other affiliated businesses in federal court. The customer’s complaint alleged, among other things, that the businesses were engaged in a racketeering scheme to foist sick and diseased puppies onto unsuspected customers who paid out premium prices for the animals.
The defendant businesses in R.C.’s case were successful in their quest for summary judgment. They won because there were several essential pieces missing from R.C.’s case, according to the 11th Circuit court.
The importance of a common scheme to engage in illegal activity
For one thing, the customer’s case lacked the required proof that a racketeering enterprise existed. Under federal law, an enterprise “includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact.”
That’s a pretty broad definition, but this plaintiff still did not have a valid enterprise. This customer’s pleadings asserted the existence of an “association-in-fact” enterprise, which is one kind of valid enterprise under civil RICO law.
This kind of enterprise requires proof that the defendants shared a common wrongful purpose. To qualify under the law, an enterprise’s purpose must be something more than just making money. It must be something like “making money by fraud.” Because this customer had no evidence of that “something more,” her claim lacked a valid enterprise.
That alone was enough to doom the federal RICO claim. Additionally, though, there was the matter of “continuity.” Continuity, in civil RICO law, means proof that the members of the enterprise engaged in a pattern of criminal activities over a substantial period of time. The law lists a series of crimes, of which the plaintiff must plead at least two, in support of that pattern of criminal activity.
What pleading fraud ‘with particularity’ means
A lot of plaintiffs will rely on mail fraud and wire fraud as the two alleged underlying crimes. Plaintiffs who rely on these are required by the law to plead fraud “with particularity.” That particularity requirement means answering “the who, what, when, where, and how” questions regarding the defendant’s participation in the alleged fraud.
That was a huge problem for R.C. because, as the appeals court noted, she never answered those questions at any point. This meant she did not plead fraud with particularity, which is another fatal flaw in a civil RICO claim.
Georgia also has its own civil RICO law, and R.C. pled both federal and Georgia RICO in her case. The burden of proof on a Georgia RICO plaintiff is lower than the burden in a federal RICO claim, but R.C.’s Georgia RICO claim also failed. While the state hurdle is lower than the federal, both require a pattern of racketeering activity, and this pet store customer didn’t have that, which was enough to doom both claims.
Some civil RICO claims will clearly be more plausible than others but, whenever your business is a defendant, all civil RICO cases are worth taking entirely seriously. Protect yourself with the skilled legal advocate your business deserves. Reach out to the experienced civil RICO attorneys at Poole Huffman, LLC. Contact our attorneys online or by calling (404) 373-4008 to schedule your confidential consultation and find how this office can help you protect your business.