PATTERN JURY INSTRUCTIONS IN CIVIL RICO LITIGATION

Transcription

1 FORM 9 PATTERN JURY INSTRUCTIONS IN CIVIL RICO LITIGATION INSTRUCTION 9.1 General Introductory Instruction for Actions Based on 18 U.S.C. 1962(a), (b), (c) and (d) As jurors, you have now heard all of the evidence that the plaintiff has presented and all of the evidence of the defense. The plaintiffs, the Vietnam Veterans of America 1 and a group of the individual members of that organization, have brought this lawsuit against a number of defendants. Most of the defendants are corporations, and most of the corporations are manufacturers or sellers of mobile homes. Before I reach the specifics of this case, I do want to make some general points. The first is that it is your duty to find the facts and reach a verdict on the basis of the facts. Your recollection of the facts that were presented during the course of this trial controls. It is for you to make judgments about the credibility of the witnesses you have heard and the documents that have been introduced as evidence. You may recall that I made some rulings during the trial, after listening to the lawyers argue, but you should not make any inferences or conclusions based on my rulings. You should focus only on the facts as presented at this trial. Another general point that I want to make is this: this case should be considered and decided by you as an action between persons of equal standing in the community. Most of the defendants are corporations. A corporation is entitled to the same fair trial as a private individual. All persons, including corporations and natural persons, stand equal before the law. 1 These pattern jury instructions represent a synthesis of actual jury instructions used in several federal litigations under civil RICO. For the sake of clarity and consistency, these pattern instructions draw on the factual allegations of the complaint in a litigation entitled Vietnam Veterans of America v. Guerdon Industries, Inc., 644 F. Supp. 951 (D. Del. 1986), discussed in Chapters 3 and 6 of this book. As of the date of the preparation of these model instructions, the actual litigation in Guerdon had not reached the trial stage, and jury instructions had not been proposed by either side. 287

2 288 FORM9 Now for the specifics of my instructions to you: The plaintiffs have brought this lawsuit against the defendants and they have alleged that these defendants violated a federal law, specifically, 1962 of Title 18 of the United States Code, a statute known as RICO, which is shorthand for its title, the Racketeer Influenced and Corrupt Organizations Act. There are four sections of that law which plaintiffs allege these defendants have violated. The plaintiffs' primary grievance-and the first one cited in their complaint-is under subsection (c) of 1962, which, as I will explain, has four subsections lettered (a) through (d). Focusing for now on subsection (c) of 1962, the law states in part as follows: 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 the enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt. INSTRUCTION 9.2 Explanation of the Word "Racketeering" I recognize that throughout the course of this trial, and in these instructions, you have repeatedly heard the word "racketeering." It is a troublesome word, and it has certain implications in our society, most of them not pleasant or admirable. But the use of that term in this statute and this courtroom should not have anything to do with your decision as to whether the plaintiffs have proved the elements of their claims against these defendants. The word "racketeering" is, for better or worse, only a term used by Congress to describe the statute. INSTRUCTION 9.3 Elements of a Claim under 1962 (c) In order to prove that the defendants violated 1962(c), the plaintiffs must establish by a preponderance of the evidence each of the following five elements: (1) That an enterprise existed; (2) That the enterprise affected interstate or foreign commerce; (3) That the defendants were associated with or employed by the enterprise; (4) That the defendants engaged in a pattern of racketeering activity or the collection of an unlawfu I debt; and (5) That the defendants conducted or participated in the conduct of the enterprise through that pattern of racketeering activity.

3 PATTERN JURY INSTRUCTIONS Alcorn County v. United States, 731 F.2d 1160 (5th Cir. 1984). 2. United States v. Phillips, 644 F.2d 971 (5th Cir. 1981), cert. denied, 457 u.s (1982). 3. Alexander Grant & Co. v. Tiffany Industries, Inc., 770 F.2d 717 (8th Cir. 1985). INSTRUCTION 9.4 Definition of the Enterprise The first element that the plaintiffs must prove is that an "enterprise" existed and that the enterprise engaged in, or had an effect on, interstate commerce. The plaintiffs have alleged that the enterprise in this case consists of a group of at least twelve corporations and some of their executives who allegedly agreed to certify to the Veterans Administration inflated wholesale costs allegedly paid by dealers in mobile homes. Some of the mobile home dealers are also alleged to be part of the enterprise. If you find that this was, in fact, a legal entity such as a partnership, corporation, or association, then you may find that an enterprise existed. Alternatively, an enterprise is a group of people which is associated together for a common purpose of engaging in a course of conduct. This group of people, in addition to having a common purpose, must have personnel who function as a continuing unit. This group of people does not have to be a legally recognized entity, such as a partnership or corporation. This group may be organized for a legitimate and lawful purpose, or it may be organized for an unlawful purpose, and the group may consist of individuals and corporations. The plaintiffs have alleged that this group of corporations and individuals whom I have mentioned constitutes the enterprise. If you find that this was a group of people characterized by (1) a common purpose, (2) an ongoing formal or informal organization, and (3) by personnel who functioned as a continuing unit, then you may find that an enterprise existed. If you find that this enterprise existed, you must also determine whether this enterprise continued in an essentially unchanged form during substantially the entire period alleged by the plaintiffs. This does not mean that everyone involved has to be the same. Essentially, the core of the enterprise has to be the same throughout. It is for you to make that decision. 1. United States v. Turkette, 452 U.S. 576 (1981 ). 2. United States v. Errico, 635 F.2d 152 (2d Cir. 1980), cert. denied, 453 U.S. 911 (1981).

4 290 FORM9 INSTRUCTION 9.5 Interstate Commerce You must also decide whether the enterprise itself or the racketeering activities of those associated with the enterprise had any impact on interstate or foreign commerce. If you find {a) that any of the acts alleged by the plaintiffs were actually committed by the defendants, (b) that at least one of these acts was an act of the enterprise, and (c) that this act affected interstate commerce, then this element of an impact on interstate or foreign commerce is satisfied. Put differently, if you find that all of the alleged acts occurred in only one state, and if the enterprise functioned exclusively in one state, then the element requiring an impact on interstate commerce could not be satisfied. It is the plaintiffs' burden of proof of show that interstate commerce was affected. 1. United States v. Banton, 647 F.2d 224 (2d Cir.), cert. denied, 454 U.S. 857 {1981}. 2. United States v. Bagnariol, 665 F.2d 877 (9th Cir. 1981}, cert. denied, 456 u.s. 962 (1982). INSTRUCTION 9.6 Association with the Enterprise The third element which the plaintiffs must prove is that the defendants were associated with or employed by the enterprise about which I have already instructed you. It is not required that the defendants have been employed by or associated with the enterprise for the entire time that the enterprise existed. It is required, however, that the plaintiffs prove, by a preponderance of the evidence, that at some time during the period indicated in the complaint, the defendants in question were employed by or associated with the enterprise. A person cannot be associated with or employed by an enterprise if he does not know of the enterprise's existence or the nature of its activities. Thus, in order to prove this element, the plaintiff must prove, by a preponderance of the evidence, that the defendant was connected to the enterprise in some meaningful way, and that the defendant knew of the existence of the enterprise and of the general nature of its activities. United States v. Castellano, 610 F. Supp (S.D.N.Y. 1985).

5 PATTERN JURY INSTRUCTIONS 291 INSTRUCTION 9.7 Pattern of Racketeering Activity The fourth element which the plaintiff must prove is that the defendants engaged in a pattern of racketeering activity or the collection of an unlawful debt. A person engages in a pattern of racketeering activity if he commits at least two racketeering acts, sufficiently related to constitute a pattern, within ten years of each other. The plaintiffs have alleged that the defendants committed the following racketeering acts: (A) that they used the mail to submit intentionally false data to the Veterans Administration to certify to the Administration inflated wholesale costs allegedly paid by dealers in mobile homes which were ultimately sold to members of the Vietnam Veterans organization; and (B) that the defendants used interstate "wires"-primarily the telephone-in connection with the alleged fraud. In other words, the plaintiffs have alleged that the defendants violated the mail fraud and wire fraud provisions of the federal criminal law.. These are the specific, predicate acts of racketeering activity which defendants are alleged to have violated. It is your function to determine how many acts of mail fraud and wire fraud, if any, were committed by the defendants. INSTRUCTION 9.8 Relationship among Racketeering Acts In order to prove a pattern of racketeering activity, it is not sufficient for the plaintiffs to prove only that the defendants committed two of the racketeering acts I have just described. A series of disconnected acts does not constitute a pattern, nor does a series of disconnected crimes constitute a pattern of racketeering activity. In order to prove a pattern of racketeering activity, the plaintiff must prove, by a preponderance of the evidence, that at least two of the alleged racketeering acts were connected by a common scheme, plan, or motive. 1. Sedima, S.P.R.L. v. lmrex Co., 105 S. Ct (1985). 2. United States v. Brooklier, 685 F.2d 1208, 1222 (9th Cir. 1982). INSTRUCTION 9.9 Conducting the Enterprise through a Pattern of Racketeering If you find that the defendants engaged in a pattern of racketeering activity, then you must consider the fifth and final element. Plaintiffs must prove, again

6 292 FORM9 by a preponderance of the evidence, that the defendants conducted or participated in the conduct of the enterprise through that pattern of racketeering activity or collection of unlawful debt. Stated simply, the plaintiffs must prove that there is a meaningful connection between the defendants' illegal acts and the affairs of the enterprise. The plaintiffs are not required to prove that the defendant in question participated in the management or control of the enterprise, or that he shared in its profits. The plaintiffs are required to prove either (1) that the defendants' positions in the enterprise facilitated their commission of the racketeering acts and that the racketeering acts had some impact or effect on the enterprise; or (2) that the acts were in some way related to the affairs of the enterprise, or that the defendants were able to commit the acts solely by virtue of their position or involvement in the affairs of the enterprise. 1. United States v. Scotto, 641 F.2d 47 (2d Cir. 1980), cert. denied, 452 U.S (1982). 2. United States v. Provenzano, 688 F.2d 194 (3d Cir.), cert. denied, 459 U.S (1982). 3. United States v. Cauble, 706 F.2d 1322 (5th Cir. 1983), cert. denied, 104 s. Ct. 996 (1984). INSTRUCTION 9.10 l I Basic Instructions Relating to a Violation of 1962(a) As I mentioned to you earlier, 1962 of RICO has four important subsections: (a), (b), (c) and (d). To this point, I have given you instructions primarily as to subsection (c), for the simple reason that it is the first of the subsections which plaintiffs in their complaint alleged were violated by these defendants. Now that I have instructed you in the substantive elements of a violation of subsection (c), I will move to subsection (a). Some of the following specific instructions will be similar to what I said in connection with subsection (c). I will try to emphasize the main differences between subsections (a) and (c). Subsection (a) differs to some extent from subsection (c). Subsection (a) provides, in relevant part, as follows: It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through collection of an unlawful debt in which such person has participated as a principal, to use or invest, directly or indirectly, any part of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. Again, I caution you about the use of the word "racketeering" in subsection (a). The word "racketeering" has certain implications. Use of that term in this statute and in this courtroom should not be regarded as having anything to do

7 PATTERN JURY INSTRUCTIONS 293 with your determination of whether the plaintiffs have established the elements of their claim. The term is only a term used by Congress to describe the statute. INSTRUCTION 9.11 Elements of a Violation of 1962(a) In order to prove that the defendants violated 1962(a), the plaintiffs must prove each of the following four elements by a preponderance of the evidence: (1) That an "enterprise" existed; (2) That the enterprise engaged in or had some effect upon interstate commerce; (3) That the defendant derived income from a pattern of racketeering activity; and (4) That some part of that income was used in acquiring an interest in or operating the enterprise. My earlier instructions to you about the "enterprise" element under subsection (c) of 1962 also holds true for subsection (a). Likewise, my earlier instructions to you regarding the effect on interstate commerce under subsection (c) also applies to that element under subsection (a). INSTRUCTION 9.12 Derivation of Income under 1962(a) At this point, my instructions to you under subsection (a) part company to some extent with my instructions under subsection (c) of The third element is that the defendants derived income from a pattern of racketeering activity. This means that you must find, by a preponderance of the evidence, that the defendants have earned some income through the commission of at least two racketeering acts sufficiently related to constitute a pattern. The plaintiffs have alleged that the defendants committed specific racketeering acts under the mail fraud and wire fraud statutes with respect to the inflation of invoices and reporting of those inflated amounts of the Veterans Administration. INSTRUCTION 9.13 Relationship between Racketeering Acts for Purposes of 1962(a) In order to prove a pattern of racketeering activity, it is not sufficient for the plaintiff to prove only that the defendants committed two of the racketeering acts I have just described. As I mentioned previously, a series of disconnected

8 294 FORM 9 acts does not constitute a pattern, and a series of disconnected crimes does not constitute a pattern of racketeering activity. In order to prove a pattern of racketeering activity, the plaintiffs must prove, by a preponderance of the evidence, that at least two of the alleged racketeering acts were connected by a common scheme, plan, or motive. INSTRUCTION 9.14 Use of Income in an Enterprise under 1962(a) The final instruction specifically dealing with the alleged violation of subsection (a) relates to what I will call the use of the income. This element requires the plaintiffs to prove that the defendants used, directly or indirectly, any part of the income derived from a pattern of racketeering activity to acquire an interest in, to establish, or to operate the enterprise. This element is satisfied if you find that by a preponderance of the evidence the defendants invested income from racketeering activities in the enterprise, or if you find that they used such income to establish or operate the enterprise. INSTRUCTION 9.15 Basic Instruction Regarding a Violation of 1962(b) As I have also told you, the plaintiffs have brought this complaint under subsection (b) of That provision is as follows: It shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. Again, my instructions regarding the use of the word "racketeering" when I instructed you about subsection (c) and subsection (a) should be kept in mind. INSTRUCTION 9.16 Elements of a Claim under 1962(b) In order to prove that the defendants violated 1962(b), the plaintiffs must establish, by a preponderance of the evidence, each one of the following four elements: (1) That an "enterprise" existed; (2) That the enterprise engaged in or had some effect upon interstate commerce; (3) That the defendants engaged in a pattern of racketeering activity; and

9 PATTERN JURY INSTRUCTIONS 295 (4) That through the pattern of racketeering activity the defendant acquired, maintained an interest in, or controlled the enterprise. As I indicated to you, my instructions regarding the "enterprise" element are the same for subsection {b) purposes as for subsections (a) and (c). United States v. Parness, 503 F.2d 430 (2d Cir. 1974), cert. denied, 419 U.S (1975). INSTRUCTION 9.17 Acquisition of an Interest in or Control of the Enterprise If you find that the alleged enterprise existed and that the defendant engaged in a pattern of racketeering activity, then you must turn to the fourth element. The final element that the plaintiff must prove is that the defendant, through the pattern of racketeering activity, acquired or maintained an interest in or control of the enterprise. To find that plaintiffs have established this element, you must find by a preponderance of the evidence not only that the defendant had some interest in or control over the enterprise, but also that this interest or control was associated with or connected to the pattern of racketeering activity. United States v. Mandel, 451 F. Supp. 977 (D. Mel. 1976). INSTRUCTION 9.18 General Instructions as to a Violation of 1962(d) The final provision of 1962 which plaintiffs have alleged defendants violated is 1962(d). Plaintiffs allege that the defendants engaged in a conspiracy to violate RICO. This means that plaintiffs allege that the defendants conspired to conduct or participate in the affairs of an enterprise through a pattern of racketeering activity. INSTRUCTION 9.19 The Elements of a Conspiracy The plaintiffs must prove by a preponderance of the evidence that the defendants knowingly and willfully became members of the conspiracy. This

10 296 FORM9 means that in order to meet their burden of proof, the plaintiffs must show that each defendant agreed to participate, directly or indirectly, in the affairs of the enterprise through a pattern of racketeering activity. You do not have to find that any racketeering acts were actually committed. 1. United States v. Boffa, 688 F.2d 919 (3d Cir. 1982), cert. denied, 103 S. Ct. 1272, 1280 (1983). 2. United States v. Elliott, 571 F.2d 880 (5th Cir.), cert. denied, 439 U.S. 953 (1978). INSTRUCTION 9.20 The Commission of Racketeering Acts There are different ways in which you can find that the defendants agreed to participate in the affairs of the enterprise through a pattern of racketeering activity. You may find by a preponderance of the evidence that by actually committing two or more racketeering acts the defendant has shown that he agreed to participate in the affairs of the enterprise through a pattern of racketeering activity. United States v. Elliott, 571 F.2d 880 (5th Cir.), cert. denied, 439 U.S. 953 (1978). INSTRUCTION 9.21 Agreement to Commit Two or More Racketeering Acts In addition, you may find that the defendant agreed to participate in the affairs of the enterprise through a pattern of racketeering activity if you find that he agreed personally to commit two or more racketeering acts to further the affairs of the enterprise. You need find only that he agreed to commit these acts; you need not find that he actually committed them. 1. United States v. Winter, 663 F.2d 1120 (1st Cir. 1981). 2. United States v. Phillips, 664 F.2d 971 (5th Cir. 1981), cert. denied, 457 u.s (1982).

11 PATTERN JURY INSTRUCTIONS 297 INSTRUCTION 9.22 Causation and Damages If you find that all of the elements of the alleged violation of 1962, as I have just described them to you, have been established by a preponderance of the evidence, before you may find for the plaintiffs, you must also find that the plaintiffs sustained an injury in their business or property. Either damages caused by the predicate acts or damages indirectly caused by the pattern of acts, or both, will satisfy this requirement. Sedima, S.P.R.L. v. lmrex Co., 105 S. Ct (1985). INSTRUCTION 9.23 Damages You reach the issue of damages only if you find that the plaintiffs have established the elements of their claim under the standards I have described. The fact that I charge you on the issue of damages does not mean that the plaintiffs are entitled to prevail. It is for you to decide whether the plaintiffs have proved their case. I instruct you on this subject only in the event that you decide that plaintiffs have sustained their burden of proof as to the elements of the claims under the standards I have described. If you find that plaintiffs have established the elements of the claim by a preponderance of the evidence, you should then consider the evidence presented concerning damages to plaintiffs' business or property which they allege were caused by the defendants' violation of the statute. The damages alleged by plaintiffs fall into one basic category. Plaintiffs assert that the defendants falsely certified to the Veterans Administration that the mobile homes purchased by plaintiffs cost the dealers more than they actually paid to manufacturers. Plaintiffs allege that the effect on them was that, in taking out Veterans Administration-insured loans, they had to pay a higher level of interest for the loans and repay the loans over a longer period of time. Plaintiffs allege that these expenses would have been less if the cost of the mobile homes had been accurately certified. You must evaluate each claim of damages and the proof submitted in support of each claim separately, and you should award damages only for those claims which you find have been established by a preponderance of the evidence.

12 298 FORM9 1. Alcorn County v. U.S. Interstate Supplies, Inc., 731 F.2d 1160, 1169 (5th Cir. 1984). 2. Hellenic Lines, Ltd. v. O'Hearn, 523 F. Supp. 244 (S.D.N.Y. 1981). 3. Parness v. Heinold Commodities, Inc., 487 F. Supp. 645 (N.D. Ill. 1980).