to be limited by existing interpretations of antitrust law. See, e.g.,
115 Cong. Rec. 6994 (1969) (recommendation of American Bar Association
against attaching RICO to Clayton Act because the "use of antitrust laws
themselves as a vehicle for combating organized crime could create
inappropriate and unnecessary obstacles" to private litigants by
requiring them to "contend with a body of precedent-appropriate in a
purely antitrust context-setting requirements on questions such as
`standing to sue' and `proximate cause'"); see also 115 Cong. Rec. 6993
(1969) (statements of Sen. Hruska).
RICO standing has been interpreted much more broadly than antitrust law
standing which, for example, contains an "antitrust injury" requirement.
The concerns which animated RICO were different from those which inform
the interpretation of the antitrust statutes. As noted below, RICO was an
attempt to deter racketeering in all is aspects, including physical
violence aimed at the person, and to remedy the full range of economic
consequences of racketeering. Physical violence and attacks upon the
person were standard tools of racketeers that RICO was designed to
address; such attacks are specifically proscribed by the statute. The two
statutes' coverage of "personal injuries" are not fully congruent.
Most importantly, the RICO statute contains an express admonition that
the statute be read broadly in order to effectuate its policies. It
provides that, "[t]he provisions of this title shall be liberally
construed to effectuate its remedial purposes." Pub.L. No. 91-452, §
904(a), 84 Stat. 922, 947 (1970); see also Sedima, S.P.R.L. v. Imrex
Co., 473 U.S. 479, 497-98, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985) ("RICO
is to be read broadly. This is the lesson "not only of Congress'
self-consciously expansive language and overall approach but also of its
express admonition . . ." (citation omitted)). The statute's "liberal
construction" provision is particularly applicable to the civil remedies
contained in section 1964. See Sedima 473 U.S. at 491 n.10, 105 S.Ct.
3275 ("Indeed, if Congress' liberal-construction mandate is to be applied
anywhere, it is in § 1964, where RICO's remedial purposes are most
While the phrase "business and property" could be interpreted to
exclude all pecuniary losses associated in any way with a personal
injury, such an interpretation would undermine the policies of RICO.
b. Legislative Purpose
Analysis of the statute's legislative history confirms that RICO was
intended to deter the use of physical violence by racketeers and to
remedy the economic consequences of those physical injuries resulting
from racketeering violence.
In enacting RICO, Congress recognized that the use and threat of
physical violence were traditional tools of the racketeer and that the
infliction of personal injuries could result in substantial economic
losses to the victims of racketeering. During the bill's debate, RICO's
co-sponsor in the Senate summarized the problem Congress faced:
"[Organized Crime] employs physical brutality, fear and corruption to
intimidate competitors and customers to achieve increased sales and
profits." 116 Cong. Rec. 602 (1970) (statement of Sen. Hruska); see also
113 Cong. Rec. 17998 (1967) (Sen. Hruska, during consideration of a
precursor to RICO, describing tools of racketeers as "large amounts of
cash coupled with threats of violence, extortion, and similar
This concern for the economic consquences of the physical injuries
caused I racketeers led Congress to include numerous references to
personal injury offenses in RICO's definition of "racketeering activity."
RICO's definition of "racketeer activity" includes, for example, "any ad
threat" involving murder, kidnaping, robbery, and extortion, which is
charge under State law and punishable by imprisonment for more than one
year. 18 U.S.C.
§ 1961(1). In addition, RICO's definition of predicate racketeering
acts includes violations of federal laws designed to control damages to
the person. See, e.g., 18 U.S.C. § 1513 (retaliating against a
witness, victim, or informant), § 1951 ("Hobbs Act," proscribing
interstate robbery, extortion and any threats or acts of physical
violence to any person or property in furtherance of interstate robbery
or extortion), § 1958 (use of interstate commerce facilities in the
commission murder-for-hire) §§ 2251, 2251A, 2252, 2258 (sexual
exploitation of children), and §§ 2421-24 ("white slave" traffic),
found in 18 U.S.C. § 1961 (1).
The commission of a "pattern" of any of these predicate offenses, when
committed in conjunction with the statute's other requirements, affords a
civil remedy for "any person" who has incurred business or property
losses as a result of the commission of the predicate acts.
18 U.S.C. § 1964 (c). RICO's legislative scheme evinces a desire on
the part of Congress to deter racketeering, in all its forms, including
racketeering violence which inflicts personal injuries. As a result, it
is reasonable to conclude that RICO is also intended to remedy the range
of economic costs of racketeering, including those economic costs
racketeers inflict when they choose to achieve their aims through a
pattern of violence and physical injury or by fraud calculated to injure
c. Case Law
The Supreme Court's expansive interpretations of RICO standing support
the conclusion that RICO should remedy the pecuniary losses caused by the
infliction of personal injuries by racketeers.
In Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S.Ct. 3275, 87
L.Ed.2d 346 (1985), the Supreme Court rejected an attempt by the court of
appeals for the Second Circuit to limit the classes of racketeering
victims who can recover under the Act. The court of appeals had held that
RICO plaintiffs were required to plead a "racketeering injury" in order
to recover under the statute. In rejecting that ruling the Supreme Court
Where the plaintiff alleges each element of the
violation, the compensable injury necessarily is the
harm caused by predicate acts sufficiently related to
constitute a pattern, for the essence of the violation
is the commission of those acts in connection with the
conduct of an enterprise. Those acts are, when
committed in the circumstances delineated in §
1962(c), "an activity which RICO' was designed to
deter." Any recoverable damages occurring by reason of
a violation of § 1962(c) will flow from the
commission of the predicate acts.
Sedima, 473 U.S. at 497, 105 S.Ct. 3275.
When the racketeering conduct involves acts of physical violence and
injury, the natural interpretation of the phrase "any recoverable damages
. . . flow[ing] from the commission of the predicate acts" suggests that
those who pay' an economic price for the racketeering acts are included
in the class of individuals who may recover.
This conclusion is further supported by the fact that the majority in
Sedima rejected an attempt by the dissent to limit RICO in a manner
analogous to that now proposed by the defendants. In Sedima, the dissent
urged that the direct victims of predicate acts such as murder and
kidnaping be excluded from recovery under the statute in order to limit
recovery to those parties suffering "commercial" losses. See Sedima, 473
U.S. at 519, 105 S.Ct. 3275 (Marshall, J., dissenting) ("Congress'
concern was not for the direct victims of the racketeers' acts, whom
state and federal laws already protected, but for the competitors and
investors whose businesses and interests are harmed or destroyed by
racketeers, or whose competitive positions decline because of
infiltration in the relevant market."). The majority refused to adopt
this approach, reasoning that there was no basis for inferring either a
"racketeering injury" requirement or a "competitive injury"
requirement in the statute's language or legislative history. Id. at 497
n. 15, 105 S.Ct. 3275 ("The dissent would also go further than did the
Second Circuit in its requirement that the plaintiff have suffered a
competitive injury. . . . The language [Congress] chose, allowing
recovery to `[a]ny person injured in his business or property,' §
1964(c) (emphasis added), applied to this situation, suggests that the
statute is not so limited.").
Additional support is provided by the Supreme Court's holding and
reasoning in National Organization for Women, Inc. v. Scheidler,
510 U.S. 249, 114 S.Ct. 798, 127 L.Ed.2d 99 (1994). In Scheidler, the
plaintiffs included two health care centers that provided medical
services including abortion. The defendants were a collection of
organizations and individuals, some of whom allegedly constituted the
RICO "enterprise, " who opposed the performance of abortions at these and
other health care facilities. In their efforts to prevent abortions at
the plaintiff clinics, the defendants allegedly were involved in a
pattern of "threatened or actual force, violence, or fear" intended to
deter employees and patients from utilizing the clinics' services. See
Scheidler, 510 U.S. at 253, 114 S.Ct. 798 (quoting plaintiffs' second
amended complaint ¶ 97). The plaintiff clinics alleged that these
efforts by the defendants had resulted in economic and business losses.
Rejecting several lower court holdings that RICO's civil remedies
require racketeering activity that is motivated by an economic purpose,
the Supreme Court in Scheidler held that the plaintiff clinics'
allegations were sufficient to state a claim under RICO:
[The plaintiffs clinics] alleged in their complaint
that respondents conspired to use force to induce
clinic staff and patients to stop working and obtain
medical services elsewhere. Petitioners claimed that
this conspiracy "has injured the business and/or
property interests of the [petitioners]." In
addition, petitioners claimed that respondent
Scheidler threatened [plaintiff's] clinic
administrator with reprisals if she refused to quit
her job at the clinic. . . . Nothing more is needed to
confer standing on [plaintiff clinics] at the pleading
Scheidler, 510 U.S at 256, 114 S.Ct. 798 (quoting second amended
complaint) (citations omitted).
As the Court's reasoning in Scheidler illustrates, RICO provides a
civil recovery for businesses which have suffered economic loss as a
result of actual or threatened physical violence conducted in a pattern
of racketeering. If a business were required to shut down by virtue of
racketeering-inflicted personal injuries to its workers, the Court's
analysis in Scheidler suggests that the business should also be allowed
to recover those economic losses resulting from the closure. There
appears to be no principled basis for allowing the business to recoup
these costs while denying that same right to the injured employees, who
also have sustained real pecuniary losses and therefore have been
"injured in their property." The encompassing phrase "any person"
contained in the statute's standing provision, as well as RICO's mandate
to liberally construe the provisions of the statute to effectuate the
statute's policies, require that the same remedies available to
businesses also be extended to individuals who have sustained economic
It is often difficult to draw a clear distinction between the economic
losses borne by individuals and by businesses. In the instant case, where
those injured in their "persons" were fortunate to have medical
insurance, the costs have ultimately been borne by the Blues who are in
the business of providing health care to the nation. These alleged
economic injuries to the plaintiffs' business and property have allegedly
undermined the financial health and stability of a critical industry in
this nation — that devoted to health care of millions of people.
See, e.g., Vernellia R. Randall, Managed Care, Utilization Review,
and Financial Risk Shifting, 17 U. Puget Sound L.Rev. 1, 3 (1994) ("[T]he
costs of health care delivery has increased and has become a national
concern."); Peter T. Kilborn, Experts Offer Information About Americans
Without Health Insurance, N.Y. Times, Feb. 26, 1999, at Al (43.4 million
Americans without insurance, "adding to the burdens on the nation's
health care system'). Employers have even found it increasingly expensive
and difficult to fund health care coverage for their own employees. See
Jennifer Steinhauer, Health Insurance Costs Rise, Hitting Small Business
Hard, N.Y Times, Jan. 19, 1999, at A1. Businesses have been forced to
devote larger and larger portions of their resources to providing health
care or have reduced benefits to their workers, compelling taxpayers, the
plaintiffs, and premium payers to subsidize the medical treatment of
those who can no longer afford insurance. Research or treatment which
would have been supported by resources of the health care industry have,
it is contended, gone unfulfilled as a result of the defendants'
racketeering. This is arguably precisely the type of economic injury
which RICO was designed to address and deter.
A number of courts, including two district courts in this circuit, have
accepted or shown a disposition in favor of allowing RICO claims for the
pecuniary losses associated with physical injuries caused by
racketeering. See Liberty v. Welch, 53 F.3d 428, 437 n. 4 (1st Cir. 1995)
("Plaintiffs like Libertad and Emancipacion could have standing to sue
under RICO, if they were to submit sufficient evidence of injury to
business or property such as lost wages or travel expenses, actual
physical harm, or specific property damage sustained as a result of a RICO
defendant's actions." (emphasis added)); Jerry Kubecka Inc. v. Avellino,
898 F. Supp. 963, 968 (E.D.N Y 1995) ("If [murder victims] had been
merely disabled by the attempt on their lives but survived, presumably
they would have had a RICO claim for lost earnings from their business
activities because they had been injured in their `business or
property.'"); von Bulow v. von Bulow, 634 F. Supp. 1284, 1309 (S.D.N.Y.
1986) ("The cost to [comatose murder target] of her committee and her
inability to enjoy her personal and real property may well be compensable
monetary injuries under RICO."); Meyer v. First National Bank & Trust
Co., 698 F. Supp. 798, 803 (D.N.D. 1987) (interpreting Sedima, "[t]he
direct damages resulting from the predicate acts would also be
compensable (i.e., recovery for the cost of a burned building, or
personal injury resulting from threats), just as damages for
"infiltration injury' to a legitimate business enterprise would be
compensable." (emphasis added)); Hunt v. Weatherbee, 626 F. Supp. 1097,
1100-1101 (D.Mass. 1986) (sexual discrimination and harassment victim
allowed to seek lost wages under RICO); Rice v. Janovich, 109 Wn.2d 48,
742 P.2d 1230, 1237-38 (1987) (assault victim allowed to seek lost wages
The plaintiff in Rice, a night watchman and janitor at a business
establishment, was allegedly assaulted' and beaten while his place of
employment was fire bombed. The court concluded that the plaintiffs loss
of wages was a compensable injury under RICO:
The defendants' arguments that plaintiffs claim for
lost wages should not be within the scope of injuries
recoverable under RICO conflict with these conclusions
in Sedima. Injuries resulting from the predicate
offenses are compensable under the act. The scope of
recoverable damages for injury "in his business or
property" is to be broadly construed. . . . The narrow
interpretation of "business and property" advocated by
the defendants, based upon analogy to numerous cited
cases of antitrust law, has been rejected by the
Rice, 742 P.2d at 1237. Other courts have allowed recovery for lost wages
outside the "personal injury"
context. See, e.g., Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162,
1170 (3d Cir. 1989) (allowing RICO claim stating, "loss of earnings,
benefits, and reputation constitute self-evident injury as in any
standard wrongful discharge action"); Snead v. Hygrade Food Prods.
Assocs., 1998 WL 910223, at *3 (E.D.Pa. 1998) (claims for economic
damages resulting from loss of employment allowed under RICO); Reynolds
v. Condon, 908 F. Supp. 1494, 1517-19 (N.D.Iowa 1995) (claims for loss of
income or employment opportunities compensable under RICO); Rodonich v.
House Wreckers Union, 627 F. Supp. 176, 180 (S.D.N Y 1985) (lost wages
claim allowed under RICO); Callan v. State Chem. Mfg. Co.,
584 F. Supp. 619, 623 (E.D.Pa. 1984) (claim for lost income from
plaintiffs' discharge allowed under RICO); cf. In re Cordis Corp.
Pacemaker Product Liab. Litig., 1992 WL 754061, at *3 (S.D.Ohio 1992)
(medical costs associated with implanting and explanting defective
pacemakers "property" under RICO).
d. RICO Limitations In Other Circuits
Defendants' support their position by reference to the holdings in some
other circuits which have not allowed the pecuniary losses due to
"personal injuries." See, e.g., Bast v. Cohen, Dunn & Sinclair, P.C.,
59 F.3d 492 (4th Cir. 1995); Doe v. Roe, 958 F.2d 763, "770 (7th Cir.
1992); Oscar v. University Students Co-operative Ass'n, 965 F.2d 783 (9th
Cir. 1992); Genty v. Resolution Trust Corp., 937 F.2d 899 (3d Cir.
1991); Grogan v. Platt, 835 F.2d 844, 848 (11th Cir. 1988); Drake v.
B.F. Goodrich Co., 782 F.2d 638, 643-44 (6th Cir. 1986). But see Libertad
v. Welch, supra, 53 F.3d at 437 n 4. To date the court of appeals for the
second Circuit has not cited these negative holdings of other circuits as
Defendants' citation to Bankers Trust Co. v. Rhoades 741 F.2d 511 (2d
Cir. 1984), vacated by 473 U.S. 922, 105 S.Ct. 3550, 87 L.Ed.2d 673
(1985), is unavailing. See id. at 515 (reasoning that plaintiff must show
a "propriety type of damage" which does not include "personal
injuries"). The facts of Bankers Trust did not involve personal injuries
and did not present the court with the unique issue of whether pecuniary
damages associated with personal injuries are compensable under the
statute. The decision in Bankers Trust, furthermore, was issued one day
after the Second Circuit's decision in Sedima and espoused the same
restrictive approach to RICO rejected by the Supreme Court in Sedima.
Bankers Trust was vacated and remanded for further consideration by the
Court the day after its decision in Sedima. See 473 U.S. 922, 105 S.Ct.
3550, 87 L.Ed.2d 673 (1985). The court of appeal's subsequent opinion in
Bankers Trust did not contain language attempting to define the types of
injury encompassed by the phrase "business of property." See 859 F.2d 1096,
1100 (2d Cir. 1988). The issues now before this court are not controlled
by a passing phrase of dictum embedded in a pre-Sedima holding that was
ultimately vacated by the Supreme Court.
In Grogan, the court of appeals for the Eleventh Circuit recognized
that there was "some merit" in allowing the pecuniary costs of personal
injuries to be recovered under RICO. See Grogan 835 F.2d at 848; see also
Doe, 958 F.2d at 770 (acknowledging that economic aspects of personal
injuries could, "as a theoretical matter," be viewed as injury to
business or property). Nevertheless, the court in Grogan refused to allow
injured FBI agents and the estates of murdered agents to seek the
pecuniary losses they allegedly suffered as a result of predicate acts of
racketeering. Id. at 847. The court based its conclusion in part on the
observation that "pecuniary and non-pecuniary aspects of personal injury
claims . . . are often to be found, intertwined, in the same claim for
The courts reasoning in Grogan is not controlling. The pecuniary and
non-pecuniary aspects of tort claims are not "intertwined" in a way that
prevents the courts from treating the two sets of claims differently.
Subrogation, where pecuniary claims of subrogees are often separated from
non-pecuniary claims of subrogors, is one example of how the two types of
claims are distinguished by courts and treated separately. See, e.g.,
Arkwright-Boston Mfrs. Mut. Ins. Co. v. City of New York, 762 F.2d 205,
209 (2d Cir. 1985) ("These two claims [of subrogor and subrogee] are
separate and distinct, and do not constitute unlawful splitting under New
York law."); Fidelity & Deposit Co. of Md. v. Gaspard, 1997 WL 335598, at
*2 (E.D.La. 1997) ("Since the two claims [of subrogee and subrogor]
against [defendant] are distinct, a judgement rendered in the absence of
[subrogor] would have no prejudicial affect on him."); Winkelmann v.
Excelsior Ins. Co., 85 N.Y.2d 577, 582, 626 N.Y.S.2d 994, 650 N.E.2d 841
(1995) ("The claims of the insurer for amounts paid by it and the
insured's claim for uninsured losses are divisible and independent, and
`[p]ermitting the insurer to sue . . . as equitable subrogee does not
affect the insured's right to sue for the amount of the loss remaining
unreimbursed.'" (quoting Federal Ins. Co. v. Arthur Andersen & Co.,
75 N.Y.2d 366, 374, 553 N.Y.S.2d 291, 552 N.E.2d 870 (1990))).
Under federal law, subrogees and subrogors are allowed to pursue their
claims in separate actions. See, e.g., Virginia Elec. & Power Co. v.
Westinghouse Elec. Corp., 485 F.2d 78, 84 (4th Cir. 1973) ("Either party
may bring the suit — the-insurer-subrogee to the extent it has
reimbursed the subrogor, or the subrogor for either the entire loss or
only its unreimbursed loss."); 6A Charles Alan Wright, Arthur R. Miller &
Mary Kay Kane, Federal Practice and Procedure § 1546, at 360 (2d ed.
1990) ("Either the insured or the insurer may sue."). The general rule in
federal courts is that the insured is not an indispensable party under
Rule 19 and need not be joined in the subrogee's action against the
tortfeasor if joinder would deprive the court of subject matter
jurisdiction. See, e.g., United States v. Aetna Cas. & Surety Co.,
338 U.S. 366, 382 n. 19, 70 S.Ct. 207, 94 L.Ed. 171 (1949) (insureds and
insurers "clearly hot `indispensable' parties"); Krueger v. Cartwright,
996 F.2d 928, 934 (7th Cir. 1993) ("We agree with the majority of courts
that have addressed the issue and applied this principle [that neither is
indispensable] as a general rule in cases of partial subrogation.").
As the example provided by subrogation suggests, there is no conceptual
or practical difficulty in separating the "intertwined" pecuniary and
non-pecuniary aspects of personal injury claims. See also, e.g., N.Y.
C.P.L.R. 4111(d), (e) & (f) (New York juries, including those trying
cases in federal courts applying New York substantive law, are required
to itemize verdicts separating items of pecuniary and "nonpecuniary,"
including pain and suffering, damages). It would be inappropriate to
frustrate the policies of RICO on the theory that the two types of claims
— pecuniary and non-pecuniary — are "indivisible."
In Genty, 937 F.2d 899 (3e4 Cir. 1991), the court of appeals for the
Third Circuit rejected the plaintiffs' pecuniary claims in part because
of the existence of alternative state law remedies. See 937 F.2d at 918
("Ample law already existed [at the time of RICO's passage] to provide
recovery for wrongfully inflicted personal injuries. The unavailability
of a civil RICO treble damages action for personal injuries in no way
restricts the plaintiffs right to bring a pendent state wrongful death
or personal injury action along with a RICO action for damages to
business or property.").
The fact that alternative state law remedies may exist for victims of
personal injury caused by racketeering is not a dispositive factor in the
interpretation of the statute. There are alternative' remedies for every
injury caused by the predicate acts of racketeers. A victim whose window
or arm was broken by racketeering has a number of alternative tort claims
from which to choose. The purpose of RICO was to superimpose another
of remedies in order to deter racketeering. As the statute's preface
states, RICO is designed to "seek the eradication of organized crime in
the United States . . . by providing enhanced sanctions and new
remedies." Pub.L. No. 91-452, § 1, 84 Stat. 922, 923 (1970) (emphasis
Similar attempts to limit RICO on the theory that it was not intended
to supplant traditional remedies have been rejected by the Supreme
Court. In Sedima, S.P.R.L. v. Imrex Co., 741 F.2d 482 (2d Cir. 1984),
rev'd, 473 U.S. 479, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985), the court of
appeals for the Second Circuit held that RICO plaintiffs were required to
assert a "racketeering injury" in order to recover under RICO. The court
based its conclusion in part on the assumption that Congress would not
have wanted to provide additional remedies for already compensable
injuries. See 741 F.2d at 494 n.37 ("`State law offenses are not the
gravamen of RICO offenses. RICO was not designed to punish state law
violations.'" (quoting United States v. Forsythe, 560 F.2d 1127, 1135 (3d
The Supreme Court rejected the court of appeal's reasoning as
contradictory to the plain meaning of the statute. It pointed out that,
"RICO was an aggressive initiative" to supplement old remedies and
develop new methods for fighting crime." Sedima, 473 U.S. at 498, 105
The court of appeal's effort to limit RICO's standing "provision in
Sedima was also motivated in part by the court's fear of the effect of
expansion of the statute into new areas. See Sedima, 473 U.S. at 499, 105
S.Ct. 3275 ("Underlying the Court of Appeals' holding was its distress at
the `extraordinary, if not outrageous,' uses to which civil RICO has been
put. Instead of being used against mobsters and organized criminals, it
has become a tool for everyday fraud cases brought against `respected and
legitimate "enterprises."'" (quoting 741 F.2d at 487)).
The Supreme Court criticized the attempt to limit the statute's scope
when such a limitation contradicted the statute's language and policies.
Though sharing the doubts of the Court of Appeals
about this increasing divergence, we cannot agree with
either its diagnosis or its remedy. The
"extraordinary" uses to which civil RICO has been put
appear to be primarily the result of the breadth of
the predicate offenses, in particular the inclusion of
wire, mail, and securities fraud, and the failure of
Congress and the courts to develop a meaningful
concept of "pattern." We do not believe that the
amorphous standing requirement imposed by the Second
Circuit effectively responds to these problems, or
that it is a form of statutory amendment appropriately
undertaken by the courts.
Sedima, 473 U.S. at 500, 105 S.Ct. 3275; cf. Blue Shield of Va. v.