The Resurrection of the "Single Scheme" Exclusion to RICO's Pattern Requirement

By Murphy, Kevin J. | Notre Dame Law Review, April 2013 | Go to article overview

The Resurrection of the "Single Scheme" Exclusion to RICO's Pattern Requirement


Murphy, Kevin J., Notre Dame Law Review


INTRODUCTION

In 1970, Congress passed the Racketeer Influenced and Corrupt Organizations Act ("RICO") as Title IX of the Organized Crime Control Act. (1) RICO was designed primarily to "eliminat[e] ... the infiltration of organized crime and racketeering into legitimate organizations operating in interstate commerce." (2) But, the language of RICO was written broadly enough to reach "both legitimate and illegitimate enterprises." (3) Congress believed that RICO would effectively "strengthen [] the legal tools in the evidence-gathering process, by establishing new penal prohibitions, and by providing enhanced sanctions and new remedies" (4) to combat "enterprise criminality." (5) Congress provided for both criminal (6) and civil (7) liability under RICO for violations of 18 U.S.C. [section] 1962, which, stated simply, (8) makes it unlawful for a person to:

(a) use or invest income derived from a pattern of racketeering activity to acquire, establish, or operate an enterprise; (9)

(b) acquire or maintain any interest in an enterprise through a pattern of racketeering activity; (10)

(c) conduct or participate in the conduct of an enterprise's affairs though a pattern of racketeering activity; (11)

(d) conspire to violate any of these provisions. (12)

Crucial to proving a violation of RICO is a showing that the defendant engaged in a "pattern of racketeering activity." The phrase is used in all four sections of [section] 1962, and applies on both the criminal and civil sides of the statute. But the meaning of "pattern of racketeering activity" has proven particularly elusive, as its bounds are especially difficult to delineate. In the text of RICO, Congress merely placed a floor on what acts could constitute a "pattern of racketeering activity," requiring at least two acts of racketeering activity within ten years of one another. (13)

The question of whether two acts within ten years could be necessary but not sufficient to form a pattern of racketeering activity laid largely dormant (14) until the Court took up Sedima, S.P.R.L. v. Imrex Co. (15) in 1984. In footnote 14, in dicta, the Court famously recognized that two racketeering acts within ten years of one another may be insufficient to form a RICO pattern and that it is the "continuity plus relationship" of acts of racketeering that forms a pattern. (16) The Court stated that "[t] he legislative history [of RICO] supports the view that two isolated acts of racketeering activity do not constitute a pattern." (17) Finally, the Court quoted the definition of "pattern" from a section of the 1970 Act in pari materia: "criminal conduct forms a pattern if it embraces criminal acts that have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events." (18)

Relying on the legal material set out in this footnote, the circuit courts quickly developed widely varying and inconsistent views of the "pattern" requirement. (19) Several of the circuits held that the presence of "multiple schemes" assisted in proving the "continuity" prong. (20) The Eighth Circuit held that a single scheme could never be sufficient to satisfy the continuity element. (21) As the circuits' approaches grew further in tension with one another, the Supreme Court took up a case from the Eighth Circuit, H.J. Inc. v. Northwestern Bell Telephone Co. (22) H.J. Inc. set out to clarify the disarray on the "pattern" requirement and bring consistency to the circuits. The Court explicitly rejected the Eighth Circuit's requirement of "multiple schemes" (23) for a pattern to be present and provided a framework for analyzing whether a pattern was present. (24) It is the last word on RICO's "pattern" from the Court.

This Note will argue that the "single scheme" exclusion (also referred to throughout this Note as the "multiple scheme requirement") to RICO explicitly rejected by the Court in H.

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