The opinion of the court was delivered by: Spatt, District Judge.
MEMORANDUM DECISION AND ORDER
Despite the explosion of civil RICO litigation in recent
years, the issue before the Court at this time has not yet
been squarely addressed by the Second Circuit: Is a municipal
corporation subject to civil liability under RICO based on an
alleged pattern of racketeering activity and underlying
predicate acts allegedly committed by its agents or employees?
This is an action brought by the plaintiffs Nu-Life
Construction Corp. ("Nu-Life") and Terminate Control Corp.
("Terminate"), pursuant to the Racketeer Influenced Corrupt
Organizations Act ("RICO"), 18 U.S.C. § 1961-68, against the
defendants Board of Education of the City of New York
("Board"), the Division of School Buildings of the Board
("DSB"), and various individual employees of each.
Presently before the Court is the motion of the Board and
the DSB, pursuant to Fed.R.Civ.P. 12(b)(6), to dismiss the
RICO claims contained in the second amended complaint for
failure to state a claim upon which relief may be granted.
This Court has twice before denied similar motions to dismiss
brought on by the Board and the DSB. However, in light of
recent appellate authority outside this Circuit, the Board and
the DSB renew that motion and seek reconsideration of the
Court's prior rulings.
For the reasons set forth below, the motion of the Board and
the DSB is granted, and the RICO claims set forth in the
second amended complaint are dismissed as against these
Since this motion is made pursuant to Fed.R.Civ.P. 12(b)(6),
the allegations of the second amended complaint are accepted
as true (see Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1098
[2d Cir. 1988], cert. denied, 490 U.S. 1007, 109 S.Ct. 1642,
104 L.Ed.2d 158 ), and, in order to prevail, the
defendants must demonstrate that under no interpretation of the
facts alleged can the plaintiffs succeed (see Conley v. Gibson,
355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 ).
With these well-settled principles in mind, the Court turns
to the allegations set forth in the second amended complaint.
Although the question presented is purely one of law, an
overview of the basic allegations is warranted.
During the years 1984 and 1985, Nu-Life and Terminate were
each awarded contracts by the Board, through the DSB, for work
in various public school facilities in New York City. Nu-Life
received construction and maintenance contracts, and Terminate
was awarded extermination and pestcontrol contracts. Each of
the plaintiffs proceeded to perform under these contracts.
Both Nu-Life and Terminate brought actions in state court
alleging, inter alia, breach of contract and tortious
interference. These actions are currently pending in New York
State Supreme Court, Kings County. In fact, Justice Aaron D.
Bernstein recently denied the defendants' motion for summary
judgment in the Nu-Life action (see Nu-Life Construction Corp.
v. Board of Ed. of the City of N.Y., N.Y.L.J., Oct. 3, 1991, p.
25, col. 5 [Sup.Ct. Kings County 1991]).
Nu-Life and Terminate also commenced this civil RICO action,
alleging conspiracy to violate RICO as well as violations of
RICO's substantive provisions (see 18 U.S.C. § 1962[c] & [d]).
The Board and the DSB now move, pursuant to Fed.R.Civ.P.
12(b)(6), to dismiss the RICO claims contained in the second
amended complaint, on the ground that they, as municipal
entities, are not subject to liability under the civil ...