Mayer Brown's



2000 Term, Number 6 / December 11, 2000

Today the Supreme Court granted certiorari in five cases, two of which are of potential interest to the business community. Amicus briefs in support of the petitioners are due on Thursday, January 25, 2001, and amicus briefs in support of the respondents are due on Monday, February 26, 2001. Any questions about these cases should be directed to Donald Falk (202-263-3245), Eileen Penner (202-263-3242) or Miriam Nemetz (202-263-3253) in our Washington office.

1. RICO — Pleading — "Person" as Distinct from "Enterprise." The Racketeer Influenced and Corrupt Organizations Act ("RICO") makes it illegal "for any person employed by or associated with any enterprise engaged in [interstate commerce] to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity." 18 U.S.C. § 1962(c). In interpreting RICO, courts have applied a "distinctness" requirement, under which the "person" charged with violating RICO must be a separate entity from the "enterprise" referred to in the statute.

 The Court granted certiorari in Cedric Kushner Promotions, Ltd. v. King, No. 00-549, to decide whether an employee acting within the scope of his employment is a "person" distinct from the "enterprise" of his employer.

Cedric Kushner Promotions Ltd. ("Kushner") is in the business of fight promotion. It manages boxers, arranges bouts on behalf of the boxers it manages, and promotes prize fighting events. Kushner filed a complaint in the Southern District of New York against boxing promoter Don King, Don King Productions, Inc., and its successor in interest, DKP Corporation ("DKP"). The complaint alleged that King was the "person" who violated RICO by engaging in a variety of predicate crimes through the "enterprise" of DKP, King's closely held corporation. The district court dismissed Kushner's complaint for failure to state a claim, holding in an unpublished opinion that King was not distinct from DKP in the relevant sense under RICO, and therefore could not be held liable under RICO for his actions on behalf of the company.

The Second Circuit affirmed. 219 F.3d 115 (2000). The court of appeals held that "the distinctness requirement [can] not be circumvented ‘by alleging a RICO enterprise that consists merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendant.'" Id. at 116 (quoting Riverwoods Chappaqua Corp. v. Marine Midland Bank, N.A., 30 F.3d 339, 344 (2d Cir. 1994)). The court therefore concluded that "where employees of a corporation associate together to commit a pattern of predicate acts in the course of their employment and on behalf of the corporation, the employees in association with the corporation do not form an enterprise distinct from the corporation." 219 F.3d at 116 (quoting Riverwoods). Because the allegations in Kushner's complaint made clear that "King was an employee acting within the scope of his authority at DKP," the Second Circuit found that the complaint "does not assert that King and DKP are distinct." 219 F.3d at 117.

The Second Circuit noted that its articulation of RICO's distinctness requirement was "in tension, if not conflict, with the decisions of other Courts of Appeals." 219 F.3d at 117 n.4. Among the courts that interpret RICO's distinctness requirement to permit RICO suits against corporate employees acting within the scope of their employment, the Second Circuit identified Brannon v. Boatmen's First Nat'l Bank of Okla., 153 F.3d 1144, 1148 n.4 (10th Cir. 1998); Richmond v. Nationwide Cassel L.P., 52 F.3d 640, 646-647 (7th Cir. 1995); Jaguar Cars, Inc. v. Royal Oaks Motor Car Co., 46 F.3d 258, 265-269 (3d Cir. 1995); Davis v. Mutual Life Ins. Co., 6 F.3d 367, 377-378 (6th Cir. 1993); and Sever v. Alaska Pulp Corp., 978 F.2d 1529, 1534 (9th Cir. 1992).

In light of the frequent use of civil RICO against legitimate businesses, and the value of the distinctness requirement as a RICO defense, this case is of substantial interest to the business community.


2. Maritime Law — Wrongful Death — Negligence. In Moragne v. States Marine Lines, 398 U.S. 375 (1970), the Supreme Court recognized under general maritime law a cause of action for wrongful death based upon unseaworthiness. Two years later, Congress passed a statute that specifically eliminated that cause of action as applied to non-seamen such as longshoremen and harbor workers. See 33 U.S.C. § 905(b). The Supreme Court granted certiorari in Norfolk Shipbuilding & Drydock Corp. v. Garris, No. 00-346, to decide whether general maritime law nonetheless provides a cause of action in negligence for the wrongful death of a non-seaman.

Christopher Garris was killed in an accident while repairing a ship berthed in navigable state territorial waters at a facility of the Norfolk Shipbuilding & Drydock Corporation. Garris's mother sued in federal district court, raising negligence claims for wrongful death under general maritime law and a Virginia statute. The district court dismissed her federal claim on the ground that general maritime law does not provide a negligence-based cause of action for the wrongful death of a non-seaman such as Garris.

The Fourth Circuit reversed. 210 F.3d 209 (2000). The court of appeals agreed with the district court that the Court had not expressly recognized a cause of action under the general maritime law for wrongful death based upon negligence in Moragne, noting that Moragne "was, both at its heart and in its facts, an unseaworthiness case." Id. at 219. The court nevertheless decided to recognize that cause of action, finding that a negligence-based remedy was appropriate under the "principles of uniformity and consistency" expressed in Moragne. Ibid. Judge Cynthia Holcomb Hall, sitting by designation, concurred only in the judgment, believing that "Moragne already covers [the relevant] claim." Id. at 222.

Like the Fourth Circuit, the Second Circuit and the Ninth Circuit have recognized a wrongful death action in negligence for non-seamen under general maritime law. See Wahlstrom v. Kawasaki Heavy Industries, Ltd., 4 F.3d 1084 (2d Cir. 1993); Nelson v. United States, 639 F.2d 469, 473 (9th Cir. 1980). The Eleventh Circuit, by contrast, has held that a wrongful death action may be maintained under general maritime law only for unseaworthiness, at least where there is also a federal statutory remedy for the same incident. See Ford v. Wooten, 681 F.2d 712 (11th Cir. 1982). As Judge Hall observed in her concurring opinion, 210 F.3d at 226 n.4, the Fifth Circuit "appears to find itself on both sides of the circuit split." Compare Ivy v. Security Barge Lines, Inc., 606 F.2d 524, 527 (5th Cir. 1979) (en banc) (rejecting negligence action under maritime law where Jones Act provided wrongful death remedy) with Miles v. Melrose, 822 F.2d 976 (5th Cir. 1989) (finding negligence action authorized by Moragne), aff'd sub nom. Miles v. Apex Marine Corp., 498 U.S. 19 (1990). State courts have also disagreed on the scope of Moragne. See, e.g., Brown v. Brown, 309 S.E.2d 586 (Va. 1983) (finding no federal cause of action for negligent wrongful death under maritime law); General Chemical Corp. v. De La Lastra, 852 S.W.2d 916 (Tex. 1993) (holding that Moragne created a cause of action for negligence).

Although the narrow issue in this case may be limited to the wrongful death of a non-seaman who lacked a federal statutory remedy, a determination that maritime law affords a wrongful death action based on negligence also could extend additional remedies in cases that come within the scope of the federal statutory scheme for maritime injuries and deaths — as some courts have held. Because a wrongful death action based on negligence under maritime law also may provide broader remedies than those otherwise available to non-seamen under state law, this case is of intense interest to all maritime businesses.


This Mayer, Brown, Rowe & Maw Supreme Court Docket Report provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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