client information. Specifically, Haviland asserts that on eight occasions, he was informed that increased cooperation between Energy Futures and Aron was necessary, and that his prospects and compensation at Goldman would be tied to such cooperation. Haviland claims that because he refused to provide the requested information, he was denied appropriate salary increases and ultimately fired in February 1989.
A. The Standard of Review
In reviewing Aron's motion to dismiss, this Court is required to accept the allegations in the complaint as true and to construe them in the light most favorable to Haviland. See Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683, (1974); Dacey v. New York County Lawyers Ass'n, 423 F.2d 188, 191 (2d Cir. 1969), cert. denied, 398 U.S. 929, 26 L. Ed. 2d 92, 90 S. Ct. 1819, (1970). The complaint will be dismissed only if Haviland can prove no set of facts that would entitle him to relief. See Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99, (1957); Goldman v. Belden, 754 F.2d 1059, 1065 (2d Cir. 1985). Despite the liberality of this standard, only the "well-pleaded factual allegations" in the complaint must be accepted as true, Papasan v. Allain, 478 U.S. 265, 283, 92 L. Ed. 2d 209, 106 S. Ct. 2932, (1986), and we need not credit "baldly conclusory" statements that are unsupported by any factual basis. Duncan v. AT&T Communications, 668 F. Supp. 232, 234 (S.D.N.Y. 1987).
B. Haviland's Claims for Relief
Haviland's complaint contains three causes of action. First, Haviland asserts a claim under 18 U.S.C. § 1962(c) of the RICO Act, which prohibits any person from conducting the affairs of an enterprise through a pattern of racketeering activity. Second, Haviland charges Aron with having conspired with Goldman to commit that substantive RICO offense in violation of 18 U.S.C. § 1962(d). Finally, Haviland asserts a claim of common law fraud.
In fleshing out his RICO claims, Haviland states that Goldman and Aron formed an "association in fact" enterprise through which they engaged in a "pattern of racketeering activity" that was directed at him. The complaint divides the pattern of racketeering activity into two separate sub-schemes, each involving a different type of predicate conduct. In describing the first scheme, Haviland focuses on the alleged plan to defraud him into remaining at Goldman, and asserts that various misrepresentations made to Goldman's customers from April 1984 to the spring of 1987 amount to "thousands of violations" of the mail fraud statute, 18 U.S.C. § 1341 (Supp. 1992), and a more limited number of violations of the wire fraud statute, 18 U.S.C. § 1343 (Supp. 1992). In describing the second scheme, Haviland sets forth the alleged efforts to extort him into divulging confidential client information that occurred from July 1987 until his termination in February 1989. Haviland contends that these threats, combined with an allegedly inappropriate raise in 1987, a salary reduction in 1988, and his ultimate discharge in 1989, constituted attempted extortion in violation of the Hobbs Act.
C. Standing Under Section 1964(c) and the Relevant Caselaw
In urging this Court to dismiss the RICO causes of action, Aron does not focus on the sufficiency of the predicate acts themselves. Instead, Aron argues that Haviland's claim is essentially one for "wrongful termination," and that courts in this Circuit and elsewhere have consistently held that the injury flowing from a retaliatory firing is insufficient to confer standing under RICO.
The right to maintain a private RICO action extends only to those "persons injured in [their] business or property by reason of a violation of section 1962 of this chapter. . . ." 18 U.S.C. § 1964(c) (emphasis added). Although the meaning of the "by reason of" language is not altogether intuitive, the Supreme Court has made clear that a "'defendant who violates section 1962 is not liable for treble damages to everyone he might have injured by other conduct.'" Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 87 L. Ed. 2d 346, 105 S. Ct. 3275, (1985) (citation omitted). Instead, a "plaintiff only has standing [under 1964(c)] if, and may recover only to the extent that, he has been injured in his business or property by the conduct constituting the violation. . . ." Id. Thus, in order to have standing to sue under RICO, the alleged injury must be caused by a pattern of racketeering activity violating section 1962 or by individual RICO predicate acts, and the RICO pattern or acts must proximately cause the alleged injury. Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 23 (2d Cir. 1990); see also Holmes v. Securities Investor Protection Corp., 117 L. Ed. 2d 532, 112 S. Ct. 1311 (1992) (right to sue under RICO requires a direct, proximate relation between the injury asserted and the injurious conduct alleged). The RICO pattern or acts proximately cause a plaintiff's injury "if they are a substantial factor in the sequence of responsible causation and if the injury is reasonably foreseeable or anticipated as a natural consequence." Hecht, 897 F.2d at 23-24 (citations omitted).
Courts in this Circuit have had numerous opportunities to apply these generalized principles to employees' specific claims that they were fired or otherwise penalized for disclosing or refusing to participate in the allegedly unlawful actions of their employers. In each case, the courts have concluded that any injury flowing from the employer's retaliatory conduct was not sufficiently proximate to the alleged RICO violations to confer standing on the employee. See, e.g., Hecht v. Commerce Clearing House, Inc., 897 F.2d 21 (2d Cir. 1990) (no standing for employee alleging loss of employment and commissions resulting from his refusal to cooperate in employer's mail and wire fraud scheme); Norman v. Niagara Mohawk Power Corp., 873 F.2d 634 (2d Cir. 1989) (no standing for employees claiming harassment in retaliation for blowing the whistle on employer's violations of the Energy Reorganization Act); Burdick v. American Express Co., 865 F.2d 527 (2d Cir. 1989) (per curiam) (no standing for stockbroker who was allegedly fired and lost his client base for complaining about his employer's acts of mail and securities fraud); Miller v. Helmsley, 745 F. Supp. 932 (S.D.N.Y. 1990) (no standing for former president of brokerage firm claiming loss of salary and commission as well as forced resignation resulting from employer's predicate acts of extortion, mail fraud, and wire fraud); Giuffre v. Metropolitan Life Ins. Co., 129 F.R.D. 71 (S.D.N.Y. 1989) (no standing for employee whose termination was the alleged "outcome" of scheme to defraud employer's customers); see also O'Malley v. O'Neill, 887 F.2d 1557 (11th Cir. 1989); Cullom v. Hibernia Nat'l Bank, 859 F.2d 1211 (5th Cir. 1988); Pujol v. Shearson/American Express, Inc., 829 F.2d 1201 (1st Cir. 1987); Nodine v. Textron, Inc., 819 F.2d 347 (1st Cir. 1987) (all concluding that employee lacked standing to recover for injuries resulting from their reporting or refusal to participate in employer's alleged RICO violations).
The starting point for all of these "refusal to cooperate" decisions is the recognition that in order to have standing under RICO, a plaintiff must demonstrate that the harm he suffered is the direct result of a predicate act or the alleged pattern of racketeering activity. Many of the conclusions that the plaintiff lacked standing, therefore, were grounded on the determination that the alleged RICO violations were aimed at someone other than the plaintiff or that the asserted injury was too "remote" to be attributed to them.
In Burdick v. American Express Co., for example, the plaintiff claimed to have been fired by his defendant-employer after protesting and refusing to participate in the employer's allegedly fraudulent activities. Beginning with the observation that Burdick could only establish standing if he showed "that the damage to his business or property resulted from the alleged mail and securities fraud," the Second Circuit first stated that any injury to defendant's customers -- who were the intended victims of the defendants' frauds -- could not be used to satisfy that requirement. 865 F.2d at 529. Noting that Burdick had also argued that the frauds had injured him by "interfering with [his] ability to service his customers, keep them happy and earn a living for himself," the Court nonetheless rejected this attempt to establish standing on the theory that "this type of harm is simply too remotely related to the predicate acts of mail and securities fraud to support a claim under RICO." Id. Finally, the Court rejected Burdick's claim that he was discharged "as a result of" his complaints concerning the defendant's fraudulent activities. Relying on the First Circuit's decision in Nodine v. Textron, Inc., the Court reasoned that any injury to Burdick's business or property flowed from the defendant's decision to fire him, rather than from the pattern of racketeering activity in which the defendant engaged.
Id., (citing Nodine, 819 F.2d at 349).
In Hecht v. Commerce Clearing House, similarly, the plaintiff argued that because he refused to cooperate in the concealment of his employer's frauds upon the company's customers, he lost commissions as well as his job. Turning first to Hecht's claim that the racketeering conduct caused him to lose commissions, which was apparently pleaded in an attempt to differentiate the case from the line of cases declining to find standing for discharged employees, see 897 F.2d at 24 n.2, the Second Circuit stated:
This injury is too speculative to confer standing, because Hecht only alleges that he would have lost commissions in the future, and not that he has lost any yet. Even assuming that Hecht actually lost commissions, we hold that his injury was not proximately caused by violations of section 1962(c).