Mayer Brown's



2001 Term, Number 14 / April 22, 2002

Today the Supreme Court granted certiorari in one case of potential interest to the business community. Amicus briefs in support of the petitioners are due on Thursday, June 6, 2002, and amicus briefs in support of the respondents are due on Monday, July 8, 2002. Any questions about this case should be directed to Miriam Nemetz (202-263-3253) in our Washington office.

Civil RICO — Damages — Availability of Injunctive Relief. The Supreme Court granted certiorari in the consolidated cases Scheidler v. NOW, Inc., No. 01-1118, and Operation Rescue v. NOW, Inc., No. 01-1119, limited to the first two questions presented by the petition in No. 01-1118: (1) whether injunctive relief is available in a private RICO action, and (2) whether the term "extortion" in the Hobbs Act includes interference with the intangible economic or liberty interests of a victim. 

The petitioners are individuals and organizations who oppose abortion. The petitioners were sued by the respondents on behalf of two putative nationwide classes consisting of (1) women's health centers at which abortions are performed, and (2) women whose freedom to use the services of such abortion clinics has been or will be interfered with by the unlawful activities of the petitioners. The respondents' suit alleged, among other things, that the petitioners violated the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., by forming a RICO "enterprise" consisting of a loose association of individuals and groups known as the Pro-Life Action Network (PLAN), united by the common purpose of closing or interfering with the activities of abortion clinics. They further alleged that the petitioners directly or indirectly participated in a pattern of racketeering activity (18 U.S.C. § 1962(c)) that included extortion in violation of the Hobbs Act (18 U.S.C. § 1951) by conspiring to use threatened or actual force, violence, or fear to induce clinic employees, doctors, and patients to give up their jobs, their right to practice medicine, and their right to obtain services at the clinics, respectively. The district court dismissed the respondents' complaint for failure to state a claim. 765 F. Supp. 937 (1991). The Seventh Circuit affirmed, reasoning, in relevant part, that RICO did not apply to defendants who commit "non-economic crimes * * * in furtherance of non-economic motives." 968 F.2d 612, 629 (1992). 

The Supreme Court reversed the Seventh Circuit's decision, holding that RICO does not require proof of an economic motive. 510 U.S. 249, 256 (1994). On remand to the trial court, the respondents filed an amended complaint requesting, for the first time, injunctive relief under RICO. Prior to trial, the district court rejected the petitioners' argument that they could not be held liable for extortion under the Hobbs Act because they had not "obtained" any "property" of the respondents and held that the respondents, as private parties, could obtain injunctive relief in an action brought under RICO. The jury returned a verdict for the respondents on their RICO claim, finding, among other things, that the petitioners had violated the Hobbs Act by committing acts or threats of extortion against patients, doctors, and/or clinic employees. The district court entered a permanent nationwide injunction regulating the petitioners' future activities at abortion clinics. 

The Seventh Circuit affirmed. 267 F.3d 687 (2001). The court held that injunctive relief is available to a private litigant suing under RICO. Id. at 695-700. In reaching this conclusion, the Seventh Circuit expressly disagreed (id. at 695) with the Ninth Circuit, which reached the opposite result in Religious Technology Center v. Wollersheim, 796 F.2d 1076 (9th Cir. 1986). The court also noted that several circuits had, in dicta, taken the same position as the Ninth Circuit. 267 F.3d at 695. The Seventh Circuit explained that a straightforward reading of the statute and the underlying purposes of the RICO statute supported the conclusion that the general remedies explicitly granted in 18 U.S.C. § 1964(a), including injunctive relief, were available to all plaintiffs. Id. at 696-698. The Seventh Circuit also held that circuit precedent dictated that interference with a victim's intangible property, such as the right to conduct a business, can constitute extortion under the Hobbs Act. Id. at 709.

The first question presented is of obvious interest to many businesses. Private plaintiffs often bring RICO claims against defendant businesses in conjunction with antitrust claims, securities claims, and state tort and contract claims. The availability of injunctive relief under RICO provides to such plaintiffs a weapon that they might not otherwise possess. If the Seventh Circuit's decision is sustained, a plaintiff may be able to use injunctive relief to shut down a defendant business or to coerce a settlement. The Supreme Court's decision may also have implications for the availability of other forms of equitable relief — including equitable rescission of contracts, disgorgement of profits, appointment of a receiver, issuance of writs of attachment, and even dissolution of a corporate defendant — in private RICO actions.

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The Court invited the Solicitor General to express the views of the United States in the following cases of interest to the business community:

Bank of America NA v. Abraham, No. 01-1179 and Norcal Waste Systems, Inc. v. Abraham, No. 1187: The questions presented are (1) does federal law exclusively govern duties of ESOP fiduciaries with respect to transactions that are exempt from ERISA's prohibited transaction provisions but nevertheless regulated by ERISA, or are ESOP fiduciaries subject to state-imposed duties with respect to such transactions as well; (2) does ERISA preempt state-law claims based upon alternative theories of liability, or are such claims not preempted so long as plaintiffs do not sue in their capacity as plan participants; and (3) does ERISA's civil enforcement provision provide exclusive remedies available to ERISA plan participants against ERISA fiduciaries for fiduciary breach, or are plan participants free to pursue state law remedies in addition to ERISA remedies? Decision below: 265 F.3d 811 (9th Cir. 2001).

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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