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MINPECO, S.A. v. CONTICOMMODITY SERVS.

March 21, 1983

MINPECO, S.A., Plaintiff,
v.
CONTICOMMODITY SERVICES, INC., CONTICAPITAL MANAGEMENT, INC., CONTICAPITAL LIMITED, NORTON WALTUCH, NELSON BUNKER HUNT, LAMAR HUNT, WILLIAM HERBERT HUNT, INTERNATIONAL METALS INVESTMENT CO., LTD., SHEIK MOHAMMED ABOUD AL-AMOUDI, SHEIK ALI BIN MUSSALEM, NAJI ROBERT NAHAS, GILIAN FINANCIAL, ACLI INTERNATIONAL COMMODITY SERVICES, INC., BANQUE POPULAIRE SUISSE, ADVICORP ADVISORY AND FINANCIAL CORPORATION, S.A., MAHMOUD FUSTOK, FAISAL BIN ABDULLAH, MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., BACHE HALSEY STUART SHIELDS, INC., E.F. HUTTON & COMPANY, INC., COMMODITY EXCHANGE, INC., AND THE BOARD OF TRADE OF THE CITY OF CHICAGO, Defendants



The opinion of the court was delivered by: LASKER

LASKER, District Judge.

 The background facts of this case are reviewed at 552 F. Supp. 332 (S.D.N.Y. 1982), familiarity with which is assumed. Defendants move pursuant to Fed. R. Civ. Pr. 12(b)(6) to dismiss the ninth claim which alleges that the acts of the defendants

 
"constitute a pattern . . . of racketeering activity, to wit, two or more acts, within ten years, of unlawful use of the United States Postal Service mail system and wire communications in interstate or foreign commerce to defraud plaintiff . . ."

 in violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 ("RICO"). *fn1" (Complaint para. 304).

 RICO, part of the Organized Crime Control Act of 1970, provides for treble damages, costs and attorneys fees in the case of any person injured by a "pattern of racketeering activity," which is defined as the commission, within a period of ten years, of two acts of any of the crimes (one of which is mail fraud) enumerated in § 1961(1).

 The major question presented on the instant motion is whether a civil RICO complaint must allege that the defendants are linked to organized crime. *fn2" Defendants contend that such an allegation is a necessary element of a civil RICO complaint. Minpeco does not allege that defendants are linked to organized crime; it contends that such allegation is not required.

 The question is not an easy one. Many courts and commentators have considered it, and differing conclusions have been drawn. See Bennett v. Berg, 685 F.2d 1053 (8th Cir. 1982); Hellenic Lines, Ltd. v. O'Hearn, 523 F. Supp. 244 (S.D.N.Y. 1981); Note Civil RICO: The Temptation and Impropriety of Judicial Restriction, 95 Har. L. Rev. 1101 (1982).

 We have carefully considered the statute, the legislative history cited by the parties and the various judicial interpretations of RICO. While serious arguments are made on both sides, we find most compelling the rationale recently expressed by Judge Pollack in Moss v. Morgan Stanley, Inc., 553 F. Supp 1347, 1361 (S.D.N.Y. 1983):

 
"There is nothing in the legislative history to suggest that Congress intended to create a private right of action for treble damages for violations of substantive statutes by ordinary business or parties. For example, it was clearly established at the time that RICO was enacted that there was no private right of action for violations of the mail fraud statute. It is implausible that Congress could have meant to alter this accepted rule to the extent of creating a right of action for treble damages without a single mention of such a revolutionary consequence anywhere in the legislative history."

 See also Adair v. Hunt International Resources Corp., 526 F. Supp. 736, 747 (N.D.Ill. 1981) ("There is simply no hint in the congressional proceedings that the Act was viewed as an alternative, and cumulative, remedy for private plaintiffs alleging . . . fraud").

 It is an established rule of statutory construction that the courts will not impute to Congress "a radical departure from established law in the absence of express congressional command." Feres v. United States, 340 U.S. 135, 146, 95 L. Ed. 152, 71 S. Ct. 153 (1950). The assertion that Congress would have, without comment or explanation, altered the statutes prohibiting mail fraud, as well as the many other statutes which could be used as predicates to RICO allegations, to provide not only for a private right of action, but also for treble damages, costs and attorneys fees, strains credibility.

 Moreover, the legislative history adds strong support to defendants' contention that control of organized crime was the raison d'etre of RICO. In United States v. Turkette, 452 U.S. 576, 69 L. Ed. 2d 246, 101 S. Ct. 2524 (1981), the Supreme Court analyzed the legislative history of RICO, concluding that

 
"It was the declared purpose of Congress 'to seek the eradication of organized crime in the United States' . . . The various Titles of the Act provide the tools ...

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