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November 1, 1982


The opinion of the court was delivered by: Decker, District Judge.


Defendants, Joan Lynch ("Lynch") and Donald Erskine ("Erskine") were convicted, for their participation in a conspiracy to obtain fraudulent real estate tax assessment reductions through bribery of officials of the Cook County Board of (tax) Appeals, of violating the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(d). In Count I of this civil action, plaintiff County of Cook ("the County"), as a "person injured in his business or property" by the conspiracy, seeks treble damages from defendants Lynch and Erskine pursuant to 18 U.S.C. § 1964(c). In Count II, the County seeks the imposition of a constructive trust on the benefits of the conspiracy which accrued to Lynch and an equitable accounting for such benefits, pursuant to Illinois law. The County has moved for partial summary judgment on Count I, on the issue of the defendants' liability under § 1962(d), contending that their convictions for violating that section collaterally estop them from denying that violation in a civil action under § 1964. The County seeks full summary judgment on Count II, based on the same estoppel.

I. The Collateral Estoppel Question

A collateral estoppel is worked where "the issue sought to be concluded is the same as that involved in the prior action; was litigated in the prior action; was in fact judicially determined in the prior action; and [where] the judgment in the prior action was dependent upon the determination made of the issue." Whitley v. Seibel, 676 F.2d 245, 248 (7th Cir. 1982), quoting 1B Moore's Federal Practice, ¶ 0.443[1] (1965). The defendants do not deny that the issue on which an estoppel is sought — their liability under § 1962(d) for acts of bribery and fraud — is the same as that involved in their criminal trial, nor that the issue was conclusively determined by the guilty verdicts in that trial.*fn1

The defendants make essentially three arguments against the application of collateral estoppel in this case. First, they contend that a criminal conviction, unlike a civil judgment, is merely evidentiary in a subsequent civil action, and cannot estop the former criminal defendant whose procedural opportunities to make his case were not as great as in the civil context. Second, they argue that, even if, as a general matter, criminal convictions can work an estoppel for a stranger to the criminal prosecution, § 1962 convictions can only be relied upon by the United States, pursuant to 18 U.S.C. § 1964(d). Finally, defendants maintain that because the contradiction between the guilty verdicts and the denials of liability in their answer creates a "genuine issue of material fact," summary judgment is inappropriate under Fed.R.Civ.P. 56(c). We will address each contention in turn.

The federal law "is well established that a prior criminal conviction may work an estoppel in favor of the Government in a subsequent civil proceeding." Emich Motors Corp. v. General Motors, 340 U.S. 558, 568, 71 S.Ct. 408, 413, 95 L.Ed. 534 (1951). Defendants' reliance on Illinois law questioning the collateral estoppel effect of a criminal conviction is misplaced, for, even if federal law does not govern the County's pendent Illinois claim, Illinois law would provide for the collateral estoppel rules of the court rendering the conviction — here the federal District Court for the Northern District of Illinois — to govern. Nathan v. Tenna Corp., 560 F.2d 761, 763 (7th Cir. 1977). Applying the law of this court, as an Illinois court would, the effect of a criminal conviction on an identical issue in a subsequent civil proceeding is not merely evidentiary. Rather, "[i]n this Circuit, [even] a criminal conviction based upon a guilty plea conclusively establishes for purposes of a subsequent civil proceeding that the defendant engaged in the criminal act for which he was convicted." Id. at 763.

Defendants contend that even if their criminal convictions may collaterally estop them in a subsequent civil action brought by the United States, the adverse party in the first action, no stranger to the original action may rely on it. Federal law no longer requires mutuality for the "offensive" use of collateral estoppel; application of such estoppel is entirely within the "broad discretion" of the trial court. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331, 99 S.Ct. 645, 651, 58 L.Ed.2d 552 (1979). The offensive use of criminal convictions by strangers to the original prosecution has been approved many times. See In re Teltronics, Ltd., 649 F.2d 1236, 1239 (7th Cir. 1981); Wolfson v. Baker, 623 F.2d 1074, 1077-81 (5th Cir. 1980), cert. denied, 450 U.S. 966, 101 S.Ct. 1483, 67 L.Ed.2d 615 (1981); and United States v. Frank, 494 F.2d 145, 160 (2d Cir.), cert. denied, 419 U.S. 828, 95 S.Ct. 48, 42 L.Ed.2d 52 (1974). While the Court in Parklane Hosiery did indicate that there were "circumstances that might justify reluctance to allow the offensive use of collateral estoppel," Parklane Hosiery, 439 U.S. at 331, 99 S.Ct. at 651, none of them is present here. The County had no opportunity to enter the federal prosecution as a party, the defendants had every incentive to litigate the first action fully and vigorously, the judgment in the criminal case was not inconsistent with any previous decision, and the first action did not deprive the defendants of any procedural opportunities available in this action "of a kind that might be likely to cause a different result." Id. at 332, 99 S.Ct. at 652.

The defendants argue that Lynch was not entitled to full discovery (specifically, deposition and compulsion of documents prior to trial) in the criminal case. In fact, the defendants did have the opportunity under the Federal Rules of Criminal Procedure both to compel the production of documents, Fed.R.Cr.P. 16(a)(1)(C), and to take depositions, had they shown this to be in the interest of justice, Fed.R.Cr.P. 15(a). The criminal conviction, the offensive use of which the Seventh Circuit approved in In re Teltronics, was obtained in the same court and under the same procedural rules. In re Teltronics, 649 F.2d at 1238 n. 2.

Defendants assert that 18 U.S.C. § 1964(d) bars anyone but the United States from employing the specific kind of criminal conviction here, i.e., a RICO conviction, to collaterally estop the convicted party in a subsequent civil action. Section 1964(d) states:

  "A final judgment or decree rendered in favor of the
  United States in any criminal proceeding brought by
  the United States under this chapter shall estop the
  defendant from denying the essential allegations of
  the criminal offense in any subsequent civil
  proceeding brought by the United States."

Defendants would have the court read into this affirmation of the United States' right to an estoppel the negation of the right of any other party to rely on a RICO conviction. The legislative history of Section 1964(d) is sparse, but there is nothing in it to support the extreme inference defendants would have the court draw. Indeed, such legislative history as there is suggests that the Congress' single concern in enacting § 1964(d) was to assure that the United States had collateral estoppel rights. In that period, before Parklane Hosiery was decided, the Congress had no need to use the provision to negate the collateral estoppel rights of private parties. Lacking mutuality, those parties had no right to work a collateral estoppel anyway. Thus, the House Report's explanation of Section 1964(d) states that the section "provides specifically for collateral estoppel" by the United States. H.R.Rep. No. 1549, 91st Cong., 2d Sess., reprinted in 1970 U.S.Code Cong. & Ad.News 4007, 4034 (emphasis added.)

The purpose of RICO was "to seek the eradication of organized crime in the United States . . . by providing enhanced sanctions and new remedies," Pub.L. No. 91-452, 84 Stat. 923. Section 904(a) of RICO (uncodified) specifically directs that its provisions "shall be liberally construed to effectuate its remedial purposes," 84 Stat. 947. It would thus be most inconsistent with the intent of the Congress for this court to rely on a negative inference from the statutory language to deny a remedy against RICO violators which the federal common law, as it has developed since RICO's enactment, would otherwise provide. Anderson v. Janovich, 543 F. Supp. 1124, 1132-1133 (W.D.Wash. 1982); State Farm Fire and Casualty Co. v. Estate of Caton, 540 F. Supp. 673, 682 (N.D.Ind. 1982); and City of Milwaukee v. Hansen, No. 77 C 246 (E.D.Wis. June 11, 1980). Cf. United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981) (negative inference from RICO language rejected; Act liberally construed to cover criminal as well as legitimate "enterprises"). Indeed, Section 904(b) of RICO (uncodified), 84 Stat. 947, provides that the remedies in the Act are not to supersede any additional civil remedies available by virtue of other provisions of law.

II. Summary ...

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