of a claim of a nonmoving party "necessarily renders all other facts immaterial as to that claim" Id. at 323.
The civil RICO statute authorizes a suit by "any person injured in his business or property by reason of a violation of section 1962." 18 U.S.C. § 1964(c). To have standing, a plaintiff must establish (1) a violation of § 1962, (2) injury to business or property, and (3) causation of the injury by the violation. Hecht v. Commerce Clearing, Inc., 897 F.2d 21, 23 (2d Cir. 1990) (citations omitted). Under both § 1962(c) and § 1962(d), a plaintiff must prove injury proximately caused by predicate racketeering acts. Id. at 25.
Defendants argue that even if Swig Weiler was injured as a result of their alleged conduct, Swig Weiler has not suffered pecuniary injury because Swig Weiler's affiliates reimbursed it for any overpayments it made. Swig Weiler argues that it sustained injury from defendants' conduct and that it is entitled to recover the bribes paid to Lewis Stahl and Jeffrey Stahl and the salary payments it made to Lewis Stahl.
Swig Weiler has raised a genuine issue of fact as to whether it sustained injury as a result of defendants' alleged bribery scheme because Swig Weiler made salary payments to Lewis Stahl for services which he performed corruptly in violation of his duty to Swig Weiler. See City of New York v. Bower, No. 89-4179, 1991 U.S. Dist LEXIS 1204, 1991 WL 19810 (S.D.N.Y. 1991); County of Cook v. Lynch, 648 F. Supp. 738, 741 (N.D.Ill. 1986). Although Swig Weiler did not identify Lewis Stahl's salary as a theory of injury in its Third Amended Complaint or RICO case statement, this claim of injury arises from the acts of bribery set forth in Swig Weiler's pleadings, and defendants have had full opportunity to conduct discovery with respect to the amount of salary paid to Lewis Stahl. (Tokakyer Aff, Ex. 5.)
Swig Weiler also has raised a genuine factual issue as to whether defendants' alleged bribery scheme injured Swig Weiler to the extent that Swig Weiler has been deprived of payments to which it is entitled. An employee who receives benefits in connection with transactions conducted by him on behalf of his employer is under a duty to give the benefits to his employer, whether or not the benefits were received by the employee in violation of his duty of loyalty. Western Electric Co. v. Brenner, 41 N.Y.2d 291, 392 N.Y.S.2d 409, 412, 360 N.E.2d 1091 (1977) (citing Restatement (Second) of Agency §§ 388, 403 (1958)). See also City of New York v. Citisource, Inc., 679 F. Supp. 393, 398 (S.D.N.Y. 1988) (City allowed to recover under RICO the value of bribes paid to its employees.) Defendants argue that Lewis Stahl's receipt of benefits did not injure Swig Weiler. However, Lewis Stahl's receipt of benefits to which Swig Weiler was entitled did injure Swig Weiler.
Jeffrey Stahl correctly argues that Swig Weiler cannot show injury caused by Jeffrey Stahl's receipt of bribe payments because Jeffrey Stahl was not Swig Weiler's employee and therefore owed no duty to turn those payments over to Swig Weiler. However, under N.Y. penal Law § 20.00, Jeffrey Stahl is subject to liability for aiding and abetting Lewis Stahl's receipt of bribes.
Coordinated argues that Swig Weiler lacks standing to assert against it a claim for a substantive violation of RICO because Swig Weiler cannot prove that it sustained injury as a result of predicate acts committed by Coordinated.
Swig Weiler claims that coordinated committed commercial bribery and violated the mail and wire fraud statutes. However, Swig Weiler has failed to raise a genuine factual issue with respect to essential elements of the offense of commercial bribery. Swig Weiler and Arrow Management Co., Inc. v. Stahl, 817 F. Supp. 404 (S.D.N.Y. 1993). Swig Weiler alleges that Coordinated violated the mail and wire fraud statutes in connection with its submission of invoices with overcharges. Coordinated does not dispute its use of the mail and telephone in connection with its submission to Swig Weiler of invoices containing overcharges. Therefore, a genuine issue of disputed fact exists as to whether Coordinated committed the predicate acts of mail and wire fraud. However, once Swig Weiler discovered the overcharges, it withheld payment to Coordinated in excess of the overcharges. Id. [slip op.] at 7-8. Therefore, Swig Weiler cannot establish that it sustained injury to its business or property caused by Coordinated's alleged violations of the mail and wire fraud statutes. Accordingly, Swig Weiler lacks standing to assert a claim against Coordinated for violation of § 1962(c).
Under its RICO conspiracy claim, Swig Weiler seeks to impose liability on Coordinated for predicate acts committed by its alleged co-conspirators. A person conspires to violate RICO when he agrees to participate in the affairs of an enterprise through a pattern of racketeering activity. A plaintiff can show that a defendant made such an agreement by establishing either that a defendant actually committed two predicate acts with knowledge that those acts were part of a pattern of racketeering activity or by showing that a defendant agreed to commit two predicate acts with such knowledge. Swig Weiler alleges that Coordinated both committed and agreed to commit the predicate acts of commercial bribery and mail and wire fraud. (Lorin Aff., Ex. S, Third Am. Compl. P 44.)
Swig Weiler has raised a genuine issue of fact as to whether Coordinated committed the predicate acts of mail and wire fraud. However, Swig Weiler, the party with the burden of proof, has proffered no proof that Coordinated knew that Primo and TCS
were paying bribes to Lewis Stahl or knew that they were submitting invoices to Swig Weiler containing overcharges which Lewis Stahl then approved. A conspiratorial agreement requires such knowledge. Therefore, Swig Weiler has failed to raise a genuine issue of fact as to an essential element of its claim against Coordinated of conspiracy to violate RICO -- that Coordinated agreed to participate in the pattern of racketeering activity in which its alleged co-conspirators engaged.
For the foregoing reasons, the motion for summary judgment of Lewis Stahl and Jeffrey Stahl is denied, and Coordinated's motion for summary judgment is granted.
Dated: New York, New York
March 31, 1993
MIRIAM GOLDMAN CEDARBAUM
United States District Judge