supra, 694 F. Supp. at pp. 1079-80 [City of New York cannot form
criminal intent to commit predicate acts, thus cannot be held
liable under civil RICO]). In addition, several district courts
outside this Circuit have held that municipalities may not be
held liable under civil RICO (see, e.g., Bonsall Village, Inc.
v. Patterson, No. CV-90-0457, slip op. [E.D.Pa. Sept. 19, 1990]
[1990 WL 139383, at pp. *4-*6, 1990 U.S.Dist. LEXIS 12530, at
pp. *13-*18]; Albanese v. City Federal Savings and Loan Ass'n,
710 F. Supp. 563, 568-69 [D.N.J. 1989]). This Court agrees with
the reasoning of those cases.
Accordingly, the Court holds that, although the Board and
the DSB are "persons" within the meaning of
18 U.S.C. § 1961(3), they are not capable of forming the criminal intent
necessary for the commission of the predicate violations of the
Hobbs Act, and therefore cannot be held liable under 18 U.S.C. § 1964(c).
Recent appellate authority outside this Circuit also
supports this result. In Lancaster Community Hosp. v. Antelope
Valley Hosp. Dist., 940 F.2d 397, 404 (9th Cir. 1991), the
Ninth Circuit held that civil RICO claims against a public
hospital district were properly dismissed since "government
entities are incapable of forming a malicious intent".
Moreover, the Ninth Circuit noted that, as a matter of public
policy, liability cannot be imposed upon the "body politic by
appeals to the doctrine of respondeat superior or to principles
of agency . . . [because] public policy is offended if all the
citizens of a state are made liable for extraordinary damages
as a result of the actions of a few dishonest officials" (id.
at p. 404).
In Genty v. Resolution Trust Corp., 937 F.2d 899, 910 (3d
Cir. 1991), the Third Circuit did not reach the issue of
whether a municipal corporation is capable of forming criminal
intent to commit predicate acts, but nonetheless held that a
municipality cannot be held liable under civil RICO because the
treble damages mandated by 18 U.S.C. § 1964(c) are "punitive"
in nature, and therefore cannot be imposed upon municipalities
which have historically been immune from exemplary damages.
By reason of this determination, the Court need not reach
the issue of whether the treble damage provision of civil RICO
precludes imposition of liability upon a municipal entity but
merely notes, however, that while there is some authority for
the proposition that civil RICO's treble damages are per se
punitive (see, e.g., Southwest Marine, Inc. v. Triple A Machine
Shop, Inc., 720 F. Supp. 805, 810 [N.D.Cal. 1989]), the courts
are apparently divided as to whether the treble damages are
"remedial", "punitive", or both in nature (see D. Smith & T.
Reed, Civil RICO ¶ 10.04  [collecting cases]). Moreover,
the Supreme Court has indicated in dicta that the treble
damages available in a civil RICO action are primarily
"remedial", and are only secondarily "punitive" (see
Shearson/American Express, Inc. v. McMahon, 482 U.S. 220,
240-41, 107 S.Ct. 2332, 2344-45, 96 L.Ed.2d 185 ).
Therefore, this Court holds only that a municipal entity,
while a "person" within the meaning of 18 U.S.C. § 1961(3), is
incapable of forming the criminal intent necessary to establish
the underlying predicate offenses under the Hobbs Act, and
therefore may not be held civilly liable under RICO, 18 U.S.C. § 1964(c).
Finally, the Court notes that this conclusion is not
inconsistent with County of Suffolk v. Long Island Lighting
Co., 907 F.2d 1295 (2d Cir. 1990), where the Second Circuit
found that a public utility is a "person" within the meaning of
18 U.S.C. § 1961(3), since it is capable of holding an interest
in property (County of Suffolk, supra, 907 F.2d at p. 1308).
The Second Circuit did not, however, address the issue of
whether the public utility could form the necessary mens rea to
commit the predicate acts.
For the reasons set forth above, pursuant to Fed.R.Civ.P.
12(b)(6), the motion of the Board of Education of the City of
New York, and the Division of School Buildings of the Board to
dismiss the RICO claims
contained in the second amended complaint as against them, is
granted. Accordingly, the first, second, fourth, fifth, sixth,
seventh, eighth and ninth causes of action contained in the
second amended complaint are dismissed as against the Board of
Education and the Division of School Buildings.
Although the RICO claims are dismissed as against these
defendants, the Court notes that the tenth cause of action
contained in the second amended complaint alleges negligent
hiring and negligent supervision by these defendants, which
cause of action has not been challenged on this motion.
Accordingly, at this juncture, the plaintiffs may proceed
against the Board and the DSB on the tenth cause of action.
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