Plaintiffs also allege that in around September or October 1998, upon realizing that USA Certified was not receiving revenue from KDH for KDH's use of their facilities, Mossberg instructed Koebel to desist from allowing Coleman to use USA Certified facilities and to remove all KDH samples from the premises of USA Certified. Mossberg asserts that Koebel represented to him that he would act in accordance with his instructions. Nevertheless, Plaintiffs allege that Koebel, utilizing USA Certified's facilities and resources, continued to act on behalf of KDH, without their knowledge.
Kelly Cook ("Cook") was hired by Koebel to be the sales manager for USA Certified at about the time of the inception of USA Certified. Cook resigned from USA Certified on or about August 17, 2000. Cook testified at her deposition that she believed that, to some extent, the money received by Koebel from USA Certified was to be booked as USA Certified revenue and that she was led to believe that USA Certified acted as the exclusive sales agent for KDH Duckhead products. She also believed that her compensation would in some way be benefitted from Koebel's work on behalf of KDH, as well as her own limited activity on behalf of KDH.
Koebel argues that Plaintiffs knew that he worked as a sales agent for KDH and that it was understood that his activities on behalf of KDH were separate and apart from his business activities on behalf of USA Certified. Moreover, Koebel argues that Plaintiffs knew and accepted that commissions from his work for KDH would be paid to Koebel alone. Coleman attests that he was uninformed and unaware as to what was done with the money Koebel made from KDH, but that he had met with Mossberg during June of 1998 and during that conversation Coleman told Mossberg about the relationship between KDH and Koebel. Coleman explains that he left any resolution of the arrangement concerning Koebel's commissions from KDH to the shareholders of USA Certified.
Based on the scheme outlined above, and the various fraudulent statements and misrepresentations alleged to have been committed by Koebel, and support for such acts provided by Coleman and KDH, Plaintiffs brought claims for fraud, violations of RICO, unjust enrichment and breach of contract against Koebel, claims for RICO violations and unjust enrichment against KDH and claims for RICO violations against Coleman. KDH and Koebel move for summary judgment on all the claims against them. Coleman made no motion nor did he join in those filed by the other Defendants. Plaintiffs argue that KDH is vicariously liable for the actions of its agent, Coleman, in connection with the RICO violations alleged against it and cross-move for summary judgment as a matter of law on that discreet issue.
A. STANDARD OF REVIEW
A motion for summary judgment should be granted where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Rodriguez v. Hahn, 209 F. Supp.2d 344, 346 (S.D.N.Y. 2002) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The role of the Court is not to resolve issues of fact but, rather, "to determine as a threshold matter whether there are genuine unresolved issues of material fact to be tried." Gibson v. Am. Broad. Companies, Inc., 892 F.2d 1128, 1132 (2d Cir. 1989). The moving party bears the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The nonmoving party "must support with specific evidence his assertion that a genuine dispute as to material fact does exist," id. at 324, 106 S.Ct. 2548, and "may not rely on conclusory allegations or unsubstantiated speculation." Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998).
The opposing party's showing of a genuine dispute must be grounded in concrete evidence sufficient to support a reasonable jury's rendering a verdict in his favor. See Anderson v. Liberty Lobby, 477 U.S. 242, 248, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). ("The mere existence of a scintilla of evidence in support of the [non-movant's] position will be insufficient."); Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). All ambiguities and reasonable inferences drawn from the underlying facts must be resolved in the light most favorable to the party opposing the motion. See U.S. v. One Tintoretto Painting Entitled "The Holy Family With St. Catherine and Honored Donor", 691 F.2d 603, 606 (2d Cir. 1982) (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962)).
The Court is "mindful that summary judgment is ordinarily inappropriate where an individual's intent and state of mind are implicated. . . . The summary judgment rule would be rendered sterile, however, if the mere incantation of intent or state of mind would operate as a talisman to defeat an otherwise valid motion." Meiri v. Dacon, 759 F.2d 989, 998 (2d Cir. 1985); accord Distasio v. Perkin Elmer Corp., 157 F.3d 55, 62 (2d Cir. 1998).
Furthermore, where the non-moving party will bear the burden of persuasion at trial, the moving party is entitled to summary judgment either where the evidence negates an essential element of the nonmovant's claims or where there is no evidence that would permit the non-movant to establish an essential element of his or her claim. See Farid v. Smith, 850 F.2d 917, 924 (2d Cir. 1988).
B. KDH'S LIABILITY FOR COLEMAN'S ACTIONS
The allegations and evidence concerning KDH's liability in the RICO violations alleged are based on Coleman's participation in a scheme with Koebel to defraud USA Certified. Accordingly, as is undisputed by the parties, central to the analysis of KDH's potential liability for the RICO charges alleged by Plaintiffs is whether, on the evidence in the record, KDH can be held liable for Coleman's actions.
It is well settled that "the aim of RICO is to protect organizations from criminal infiltration, not to make them responsible parties." Volmar Distributors, Inc. v. New York Post Co., Inc., 899 F. Supp. 1187, 1192 (S.D.N.Y. 1995); accord Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 164, 121 S.Ct. 2087, 150 L.Ed.2d 198 (2001); Laro, Inc. v. Chase Manhattan Bank, 866 F. Supp. 132, 139 (S.D.N.Y. 1994); see also, Rush v. Oppenheimer & Co. Inc., 628 F. Supp. 1188, 1194-1195 (S.D.N.Y. 1985) ("Superimposing vicarious liability doctrines on the RICO criminality requirements would in this context permit the `enterprise' which is the conduit for these activities, to become the defendant by way of imputation, in a transparent attempt to reach a deeper pocket than the actual violator or perpetrator of the predicate racketeering acts.")
Although this overriding intent of RICO is universally acknowledged, courts must also consider whether an employee's actions are sufficiently representative of the corporation as a whole so as to implicate a corresponding goal of RICO: protecting the public from those who would unlawfully use a corporation as a vehicle through which unlawful activity is committed. See Cedric, 533 U.S. at 164-165, 121 S.Ct. 2087; National Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 259, 114 S.Ct. 798, 127 L.Ed.2d 99 (1994).
Neither the Second Circuit nor the Supreme Court have definitively settled the extent to which ordinary respondeat superior principles make a corporation legally liable under RICO for the criminal acts of its employees. See Cedric, 533 U.S. at 166, 121 S.Ct. 2087; Qatar Nat'l Navigation & Transp. Co. Ltd. v. Citibank, N.A., 89 Civ. 0464, 1992 WL 276565, *7 (S.D.N.Y. September 24, 1992). Essentially, however, the Supreme Court has directed that a corporation can be held liable when the organization itself is being conducted as an illegitimate criminal enterprise or "in a manner detrimental to the public interest." Cedric, 533 U.S. at 165, 121 S.Ct. 2087 (quoting S.Rep. No. 91-617, at 82.); accord Kovian v. Fulton County Nat'l Bank and Trust Co., 100 F. Supp.2d 129, 133 (N.D.N.Y. 2000) ("For purposes of vicarious RICO liability, courts distinguish `between `aggressor' corporations that are central figures in the unlawful scheme and `conduit' corporations that unknowingly facilitate the illegal behavior' and noted that most courts `have declined to subject the [latter] to RICO liability.'") (quoting Amendolare v. Schenkers Intern. Forwarders, Inc., 747 F. Supp. 162, 168 (E.D.N.Y. 1990)).
Following the basic principle that RICO is intended to protect and not victimize organizations, decisions in this district generally hold that "corporations may not be held vicariously liable for the actions of their employees in violation of the RICO statute `where the plaintiff has not alleged any facts which portray the company as an active perpetrator of the fraud or a central figure in the criminal scheme.'" Qatar, 1992 WL 276565, at 7 (quoting Philan Ins. Ltd. v. Frank B. Hall & Co. Inc., 748 F. Supp. 190, 198 (S.D.N.Y. 1990); accord Schmidt v. Fleet Bank, 16 F. Supp.2d 340, 351 (S.D.N.Y. 1998); Amendolare, 747 F. Supp. at 168 ("vicarious liability under RICO is only permitted when the defendant corporation can be characterized as the `central' or `controlling' figure in the RICO enterprise."))
In order to demonstrate that a corporation is directly involved or central to the RICO scheme alleged, Plaintiffs must show that a corporate officer or director had knowledge of or was recklessly indifferent toward the unlawful activity. See Amendolare, 747 F. Supp. at 169; Laro, 866 F. Supp. at 140. Even upon such a finding, other factors, including the number of high-level employees involved, their degree of participation in the alleged scheme, as well as the extent of the corporation's benefit from the scheme, should then be considered before corporate liability is properly attributed. See Amendolare, 747 F. Supp. at 169; Laro, 866 F. Supp. at 140; see also Dubai Islamic Bank v. Citibank, N.A., 126 F. Supp.2d 659, 671 (S.D.N.Y. 2000).
Some courts in this Circuit have imposed RICO liability on a corporation for the acts of its employees based, at least in part, on whether the corporation itself benefitted from the scheme. See Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, 808 F. Supp. 213, 236 (S.D.N.Y. 1992) ("Where the employer allegedly benefits from the predicate acts, respondeat superior liability under RICO is appropriate."); Connors v. Lexington Ins. Co., 666 F. Supp. 434, 453 (E.D.N.Y. 1987) ("§ 1962(c) liability may be appropriate so long as the employer/enterprise actually benefitted from the  predicate acts.") This approach was adopted by the Seventh Circuit in D & S Auto Parts Inc. v. Schwartz, 838 F.2d 964, 967 (7th Cir. 1988). However, even under the analysis in D & S Auto Parts, the Seventh Circuit held that "[a]n employee violating RICO without his employer's knowledge is highly unlikely to be acting for his employer's benefit," 838 F.2d at 967, thereby incorporating the presumption that for a corporation to be held liable under RICO, an employer will most likely be aware of the wrongdoing of its employee.
Courts have also focused on principles of agency in determining the appropriateness of corporate vicarious liability in the RICO context. Connors, 666 F. Supp. at 453; Bernstein v. IDT Corp., 582 F. Supp. 1079, 1083-84 (D.Del. 1984) ("When conduct is proscribed by a federal statute and civil liability for that conduct is explicitly or implicitly imposed, the normal rules of agency law apply in the absence of some indication that Congress had a contrary intent."); see also Amendolare, 747 F. Supp. at 168-171 (agency one of a number of principles considered in determining vicarious liability); Kovian, 100 F. Supp.2d at 133 (finding that high ranking officers of a bank could not implicate the Bank's liability because they were acting outside the scope of their employment). However, under agency principles, for liability to be attributed to the corporation, an agent must be acting within the scope of his employment, typically meaning that the corporation must have been aware of the scheme or artifice to defraud. Kovian, 100 F. Supp.2d at 133; see also Restatement (Second) of Agency § 219 (1958).
The weight of the authority in this District supports imposing vicarious liability on corporations in RICO actions based on the centrality of the role played by the corporate entity, a test which is therefore crucial to this Court's consideration in the case at hand. In this case, Coleman is not an officer or director of KDH, which Plaintiffs do not contest, nor have the Plaintiffs alleged substantial participation by other officers or employees of KDH in any fraudulent scheme. (See Affidavit of William H. Nichol, Jr. ("Nichol Aff.") in Support of KDH's Motion for Summary Judgment, dated October 22, 2002, at ¶ 6). There are also no allegations in the Complaint, nor is there any proof in the record, that anyone else at KDH, most importantly an officer or director, was informed about the allegedly fraudulent scheme. Coleman's actions, as framed by Plaintiffs, likely benefitted KDH, the absolute minimum for imposing liability on a corporation for the acts of its employees or agent, see Volmar, 899 F. Supp. at 1193, but there is no evidence in the record here that KDH was aware that such benefits from Koebel's sales were in any way related to a fraudulent scheme. Accordingly, KDH is not subject to liability from any alleged fraudulent activities by Coleman because Plaintiffs have failed to present sufficient evidence of the centrality of KDH's role in the alleged scheme by pointing to the actions of a single KDH employee, even to one characterized as a "high level staff" person. See Qatar, 1992 WL 276565, at *5 ("[i]n order to create a strong inference that Citibank was involved, the plaintiff must allege some higher level of complicity than merely the participation of [an Assistant Vice-President and Manager of Citibank's branch office in Bronxville] and the use of Citibank equipment to perpetrate the scheme.")
However, even to the extent that agency principles would otherwise apply in this case, they are of no avail to Plaintiffs in implicating KDH in violations of RICO.*fn3 Fundamentally, as will be discussed at length in the next section, the Court finds that Plaintiffs have not produced evidence, sufficient to survive summary judgment, demonstrating that Coleman's actions were fraudulent or that he conspired or schemed with Koebel to defraud USA Certified.*fn4 Therefore, the Court finds that although Coleman's actions, as alleged by Plaintiffs, can fairly be attributed to KDH under general principles of agency, since they were in fact within the scope of his employment at KDH, Coleman's actions nonetheless do not implicate him or KDH in RICO violations. Coleman's conduct, as alleged, for the most part, reflected legitimate actions on the part of an employee of KDH in promoting KDH's business. In any event, whether legitimate or not, on the record before it, there is insufficient proof of Coleman's involvement in a fraudulent scheme to deprive USA Certified of its business for the Court to allow the RICO claims against Coleman or KDH to go to a jury.
C. RICO CLAIMS AGAINST COLEMAN/KDH
1. 18 U.S.C. § 1962(a) and (b)
Plaintiffs assert four separate claims of RICO violations against Coleman and KDH. Based on even the most liberal reading of the Complaint, two of the four claims alleged fail as a matter of law, as against all Defendants, for failure to state a claim. Title 18 U.S.C. § 1962(a) and (b) provide, in relevant part, that
(a) It shall be unlawful for any person who has
received any income derived, directly or indirectly,
from a pattern of racketeering activity . . . to use
or invest, directly or indirectly, any part of such
income, or the proceeds of such income, in the
acquisition of any interest in, or the establishment
or operation of, any enterprise which is engaged in,
or the activities of which affect, interstate or
(b) It shall be unlawful for any person through a
pattern of racketeering activity or through
collection of an unlawful debt to acquire or
maintain, directly or indirectly, any interest in or
control of any enterprise which is engaged in, or the
activities of which affect, interstate or foreign