United States District Court, Northern District of Illinois, E.D
January 21, 1985
RAYMOND O'DONNELL, PLAINTIFF,
STANLEY T. KUSPER, COOK COUNTY CLERK, IN HIS INDIVIDUAL AND OFFICIAL CAPACITY, OFFICE OF THE COUNTY CLERK OF COOK COUNTY, STANLEY KUSPER CAMPAIGN COMMITTEE, HARRISON LITHOGRAPHING, INC., J.J. COLLINS' SONS, CAHILL PRINTING COMPANY, F.J. NENNING & SONS, M. KALLIS & COMPANY, INC., NORTHWESTERN PRINTING HOUSE, INC., AND THE BOARD OF COMMISSIONERS OF COOK COUNTY, AND THE FOLLOWING COMMISSIONERS, MATTHEW BIESZCZAT, CHARLES BOWEN, BERNARD CAREY, FRANK CHESROW, GEORGE DUNNE, CARL HANSEN, IRENE HERNANDEZ, MAY MCDONALD, DANIEL O'BRIEN, JEANNE P. QUINN, MATT ROPA, RICHARD A. SIEBEL, JOHN H. STROZER, JR., MARTIN TUCHOW, HAROLD L. TYRRELL, SAMUEL G. VAUGHAN, AND JOSEPH WOODS, BOTH IN THEIR INDIVIDUAL AND OFFICIAL CAPACITY, DEFENDANTS.
The opinion of the court was delivered by: Roszkowski, District Judge.
Before the court are defendants' various motions to dismiss and
motions for sanctions. Also before the court is plaintiff's
motion to file a Second Amended Complaint. The court's subject
matter jurisdiction is asserted to rest upon 28 U.S.C. § 1331
(1982) and 18 U.S.C. § 1964 (1982). For the reasons set forth
herein, defendants' motions to dismiss are granted and
defendants' motions for sanctions are denied. Plaintiff's motion
to file a Second Amended Complaint is also denied.
On December 30, 1983, plaintiff, Raymond O'Donnell, a resident
taxpayer of Cook County, Illinois filed a three count complaint
in this court. Count I alleged a substantive violation of the
Racketeer Influenced and Corrupt Organizations ("RICO") statute.
18 U.S.C. § 1962(c). Count II alleged a conspiracy to violate the
RICO statute. 18 U.S.C. § 1962(d). Count III, a pendent state
action, purported to allege a violation of Chapter 34, Section
1001 et seq. of the Illinois Revised Statutes. ILL.REV.STAT. ch.
34, ¶ 1001 et seq. (1983).
The various defendants named in the plaintiff's initial
complaint included the Cook County Clerk, his election campaign
committee, the office of the County Clerk, five printing
companies located within the County, the County Board of
Commissioners, and all of the individual Board and Board finance
committee members. The complaint alleged the Board, upon the
urging of the County Clerk, approved contracts for the printing
of election ballots with the five named printing companies.
According to the plaintiff's complaint, the contracts with the
five named printers were extended and approved without complying
with the public notice and sealed competitive bidding
requirements of ILL.
REV.STAT. ch. 34, ¶ 1006 (1983). The complaint further alleges
that various of the named printers made substantial contributions
to the County Clerk's election campaign. In his prayer for
relief, plaintiff sought to require the defendants to return to
Cook County all of the money paid out on the allegedly unlawful
contracts. In addition, plaintiff sought treble damages on behalf
of the County.
On February 2, 1984, plaintiff filed his First Amended
Complaint. The plaintiff's First Amended Complaint simply added
various allegations to the effect that one of the five named
printers had substantially completed the printing it was
contracted to perform at the time the County Clerk urged the
Board to authorize the contract. No counts were added or deleted;
the prayer for relief was not altered.
On February 29, 1984, the defendants filed various motions to
dismiss. The defendants' motions sought to dismiss Counts I and
II on the grounds that they failed to allege a separate
enterprise, any predicate offense or any RICO injury. In
addition, defendants contended the plaintiff lacked standing to
bring Counts I and II. The defendants also sought to dismiss
Count III on the grounds no pendent jurisdiction remained.
On March 7, 1984, this court set a briefing schedule allowing
the plaintiff until March 21, 1984 to file a response to the
various motions to dismiss and giving the defendants until March
28, 1984 to reply. On March 19, 1984, plaintiff filed a motion
for an extension of time, until April 27, 1984, ". . . to file
his consolidated answer to [the] defendants' motions to dismiss."
In this court's absence, that extension was granted by the
Honorable Judge Milton I. Shadur. On April 5, 1984, in view of
the extension granted the plaintiff, this court extended the time
for the defendants to file their replys to May 7, 1984.
On May 2, 1984, plaintiff again presented a motion seeking an
extension of time, until May 25, 1984, ". . . in which to respond
to [the] Defendants' motions to dismiss." The court again granted
the requested extension. On May 8, 1984, the defendant Clerk
filed his initial motion to recover costs and attorneys' fees;
the motion arose out of the allegedly improper notice given with
respect to plaintiff's May 2, 1984 motion for an extension of
time. After the hearing on the defendant Clerk's motion, the
court shortened the "[t]ime for plaintiff to file [a]
consolidated response to defendants' [m]otion[s] to [d]ismiss
with supporting memoranda" to May 25, 1984. The court took the
defendant Clerk's motion for costs under advisement. On May 17,
1984, upon the plaintiff's renewed motion, the time for
responding was again extended to May 25, 1984.
On May 25, 1984, plaintiff filed a motion to add Omega Graphics
as a plaintiff, an amended nine-count complaint, and a memorandum
in support of his proposed amended complaint. In addition to
seeking recovery on behalf of the County, Omega Graphics prayed
for damages on its own behalf. On June 5, 1984, defendants filed
a joint motion for sanctions, for denial of leave to file the
Second Amended Complaint, to strike the Second Amended Complaint,
and to dismiss the First Amended Complaint with prejudice. All of
the motions were taken under advisement.
On September 6, 1984, plaintiff presented a motion for leave to
file his amended complaint and for leave to add Omega Graphics as
a plaintiff. Defendants renewed their previously filed motions.
The entire matter was again taken under advisement.
A. Motion To Dismiss: Standing
Defendants challenge the plaintiff's standing to bring the
present action on two distinct grounds. First, the majority of
the defendants contend the plaintiff lacks standing because he
has failed to allege a cognizable "racketeering injury." Second,
relying upon Flast v. Cohen, 392 U.S. 83, 88 S.Ct. 1942, 20
L.Ed.2d 947 (1968) and Larson v. Valente, 456 U.S. 228, 102 S.Ct.
1673, 72 L.Ed.2d 33 (1982), the defendant
Commissioners contend the plaintiff, as a taxpayer, lacks a
sufficient "personal stake" to sue on behalf of the County.*fn1
Title 18, Section 1964, 18 U.S.C. § 1964 (1982), provides that:
Any person injured in his business or property by
reason of a violation of section 1962 of this chapter
may sue therefor in any appropriate United States
district court and shall recover threefold the
damages he sustains and the costs of the suit
including a reasonable attorney's fee.
In order to allege a violation of section 1962, plaintiff must
allege a defendant participated in, or conspired to participate
in, a "pattern of racketeering activity." A "pattern of
racketeering activity" is defined as ". . . at least two acts of
racketeering activity . . ." occurring within a specified period.
Among the types of conduct expressly designated as "racketeering
activity" are various crimes indictable under state and federal
The majority of the defendants contend the "by reasons of"
language of § 1964 requires the plaintiff to allege he has
suffered some "racketeering injury" separate and apart from any
injury he has suffered as a result of the "predicate acts" of
racketeering activity allegedly giving rise to the violation of
§ 1962. Absent such an injury, defendants contend the plaintiff
lacks standing to bring a suit based upon a RICO violation.
Defendants' argument is of no avail. The Seventh Circuit has
recently made clear that it is not necessary to allege a separate
"racketeering injury" apart from the injury caused by the
underlying predicate acts in order to allege a violation of RICO.
Haroco, Inc. v. American National Bank and Trust Co. of Chicago,
747 F.2d 384, 398 (7th Cir. 1984). Thus, to the extent the
defendants' motions rely upon the absence of any such
"racketeering injury," they are denied.
The question of the plaintiff's standing to sue on behalf of
the County presents a far more difficult question. Plaintiff
points to various state statutes which he asserts allow him to
bring the present action. The only statute plaintiff cites
expressly providing for a derivative taxpayer action,
ILL.REV.STAT. ch. 34, ¶ 959 (1983), however, does not apply in
the present case. That statute would only be applicable if the
plaintiff had alleged the County had not provided for the
printing of election ballots in its appropriation bill, or that
the County had paid more for the printing of election ballots
than it had provided for in its appropriation bill. Neither is
alleged to be the case.
The statute governing any action in the present case,
ILL.REV.STAT. ch. 34, ¶ 1008 (1983), is silent as to any
derivative taxpayer action. Moreover, no Illinois court has
decided whether such an action should be implied under that
statute. Despite the fact that one statute expressly provides for
a derivative taxpayer suit and the other is silent, however,
Illinois courts probably would recognize a taxpayer derivative
suit under both provisions. Based upon taxpayers' interest in
public property, Illinois courts have generally allowed taxpayers
to bring actions premised upon violations of state and local law.
See Young v. Public Building Commission of St. Clair County,
5 Ill. App.3d 892, 284 N.E.2d 485, 487 (1st Dist. 1972). Thus, in
the view of this court, Illinois courts would probably recognize
the plaintiff's standing to bring an action based upon a
violation of the statutory notice and competitive bidding
requirements contained in § 1006. ILL.REV.STAT. ch. 34, ¶¶ 1006,
The mere fact that Illinois courts would recognize the
plaintiff's standing to bring such an action, however, does not
mean he has standing to bring a federal action arising from the
same occurrence. The plaintiff's standing to assert a federally
created right is not controlled by state law. As one commentator
has noted, "[i]f
a challenged state act indeed violates federal law, no reason has
yet been found to rest federal standing determinations on the
disparate allocations of power that underlie fifty different
governmental structures." Wright & Miller, Federal Practice and
Procedure, § 3531.10 (1984), p. 653. Thus, the determination of
whether the plaintiff, as a taxpayer, has standing to bring a
RICO action on behalf of a governmental entity must be determined
under federal law.
No court has been faced with the issue of whether a taxpayer
has standing to bring a RICO action on behalf of an injured
governmental entity. The issue has surfaced with some frequency,
however, under the private enforcement provisions of the
antitrust laws. 15 U.S.C. § 15 (1982). Title 15, section 15,
provides in relevant part:
Any person who shall be injured in his business or
property by reason of anything forbidden in the
antitrust laws may sue therefore . . . and shall
recover threefold the damages by him sustained, and
the cost of suit, including a reasonable attorney's
In each of the decisions resolving the issue under the
antitrust laws, federal standing has been denied to taxpayers. In
Cosentino v. Carver-Greenfield Corporation, 433 F.2d 1274 (8th
Cir. 1970), for example, the court denied a taxpayer standing to
bring a derivative antitrust action on behalf of the City of
Omaha despite the fact that Nebraska law permits a taxpayer to
bring a derivative action when municipal funds are unlawfully
expended. In reaching this conclusion, the court noted it was
unable to find any decision ". . . which allows a private citizen
to assert derivatively an antitrust claim on behalf of the city
in which he lives." Id. at 1277. The court reasoned,
A citizen of Omaha, Nebraska, cannot expect to
elevate himself by means of a lawsuit to a position
in which he can exercise the power of a public
authority, at least absent abusive or illegal acts by
city officials, which are not alleged in this case.
Id. (emphasis added).
Similarly, in Ratliff v. Burney, 657 F.2d 640
(4th Cir. 1981),
the court affirmed a lower court dismissal of a taxpayer action
on the grounds that: (1) the plaintiff could not maintain an
individual action because he was not in the "target area" of the
alleged antitrust violation; and (2) the plaintiff could not
maintain a derivative action because he failed to allege fraud by
the county officers. The appellate court noted, however, that
"[t]he [district] court did not decide whether derivative actions
analogous to shareholder suits are available to taxpayers seeking
to sue under Section 4 of the Clayton Act." (emphasis added) 657
F.2d at 642.
In Ratliff and Ragar, the courts were not required to decide
whether taxpayers have standing to bring an action analogous to
a shareholder derivative suit because, even assuming the
recognition of an analogous action, the plaintiffs had failed to
allege fraud on the part of the governmental officials
responsible for bringing such an action. In shareholder
derivative suits, such allegations are necessary to allow the
shareholder to represent the injured corporation in lieu of the
corporate officers. See Ash v. International Business Machines,
Inc., 353 F.2d 491, 493 (3rd Dist. 1965), cert. denied,
384 U.S. 927, 86 S.Ct. 1446, 16 L.Ed.2d 531 (1966), and Swanson v. Traer,
249 F.2d 854, 858 (7th Cir. 1957); see also Fed.R.Civ.Pro. 23.1.
This court has been unable to locate any decisions determining
whether a shareholder has standing to maintain a RICO action on
behalf of an injured corporation. As in Ratliff and Ragar,
however, this court need not decide the issue because, even
assuming the recognition of a RICO shareholder derivative action
and an analogous taxpayer derivative action, the plaintiff has
failed to allege any fraud on the part of the County official
responsible for deciding whether to institute any RICO action.
While the plaintiff has alleged fraud on the part of the County
Clerk and County Commissioners, he has not alleged any fraud on
the part of the County State's Attorney.
Under Illinois law, a state's attorney has the duty "[t]o
prosecute . . . all actions and proceedings for the recovery of
debts, revenues, moneys, fines, penalties and forfeitures
accruing to the State or his county. . . ." ILL.REV.STAT. ch. 14,
¶ 5(2) (1983). Interpreting that statute, Illinois courts have
long recognized that, with respect to the state's attorney,
"[t]he county board has no power to lessen his duties or to
curtail the exercise of his lawful authority or to control him
therein." Wilson v. County of Marshall, 257 Ill.App. 220, 224
(2nd Dist. 1930). Indeed, the Illinois Supreme Court has
recognized the right of a state's attorney, on behalf of his
county, to bring an action for diversion of public money in
violation of a state statute against the members of his county
board of commissioners, his county treasurer and his county
clerk. People ex rel. Courtney v. Ashton, 358 Ill. 146, 153-54,
192 N.E. 820 (1934). Thus, the County official responsible for
maintaining a RICO action in the present case is the State's
Under the circumstances of this case, plaintiff lacks standing
to maintain the present action. There has been no allegation that
the State's Attorney's failure to institute a similar action was
fraudulent, collusive or represented anything other than the
honest exercise of his legal judgment. This court is in agreement
with the court in Cosentino that a taxpayer of Cook County cannot
expect to elevate himself, by means of a lawsuit, to a position
in which he can exercise the power of the State's Attorney, at
least absent abusive or illegal acts by the State's Attorney.
Defendants' motion to dismiss for lack of standing, therefore,
must be allowed.*fn3
B. Motion For Leave To Amend
A remaining question is whether this court should allow the
plaintiff leave to file his proposed Second Amended Complaint.
That complaint purports to add, or more accurately substitute,
Omega Graphics as a plaintiff in this action. While it is not
clearly plead, Omega Graphics would apparently seek to recover
RICO damages on its own behalf, as well as on behalf of the
To the extent that it would seek to recover on behalf of the
County, Omega Graphics would have no better standing than the
present plaintiff. To the extent that it would seek to recover on
its own behalf, Omega Graphics would be asserting a new action,
distinct from the plaintiff's present claim. Moreover, Omega
Graphics injuries and remedies would not be co-extensive with the
County's. Thus, the issue is whether the court should allow a new
plaintiff, seeking different relief, to substitute for a
plaintiff dismissed for lack of standing.
This court is unaware of any rule or decision authorizing such
a procedure. Rule 17(a) was clearly not intended to accomplish
such a result. Rule 17(a) is intended to allow substitution when
an improper plaintiff has been inadvertently named; it is not
intended to permit an attorney to locate and substitute a new
plaintiff, suing upon a new claim, simply to sustain a pending
action. Wright & Miller, Federal Practice and Procedure, §
1555 (1984). Thus, plaintiff's motion to file a Second Amended
Complaint is denied.*fn4
C. Motions For Sanctions
The final issue is the imposition of any sanctions. Defendants
seek costs and attorneys' fees based upon the plaintiffs having:
. . repeatedly ignored the orders of this Court,
violated the Federal Rules of Civil Procedure by
improperly noticing motions and other pleadings, by
improperly serving or failing to serve other parties,
and by misrepresenting to defense counsel the date,
time and location at which a motion will be heard.
This court finds no evidence of such repeated violations. While
some confusion was generated by plaintiff's improper notice of
his second motion for an extension, the inconvenience was minor.
This is not the type of conduct for which this court normally
Moreover, the court finds nothing objectionable about the
plaintiff's attempting to file a Second Amended Complaint in
response to the defendants' motions to dismiss. In large part,
the defendants' motions were devoted to technical pleading
deficiencies; the standing issue, for example, was barely
developed outside the context of the rejected "racketeering
injury" requirement. The plaintiff was merely attempting to cure
defendants' technical objections by filing his Second Amended
Complaint. While it was improper to file the amended complaint
and add an additional party without leave of court, the court
believes the plaintiff's conduct was not deliberate. Once the
error was brought to the plaintiff's attention, plaintiff filed
an appropriate motion. Once again, this is not the type of
deliberate conduct for which this court is accustomed to awarding
sanctions. Thus, defendants' motions for sanctions are denied.
For all of the reasons set forth herein, defendants' motions to
dismiss are granted, and defendants' motions for sanctions are
denied; plaintiff's motion to file a Second Amended Complaint is