The opinion of the court was delivered by: Bua, District Judge.
Before the Court is defendants' motion to dismiss the complaint
pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure. Jurisdiction is invoked pursuant to 18 U.S.C. § 1964(a)
and the doctrine of pendent jurisdiction. For the reasons
stated below, defendant's motion to dismiss is denied.
Plaintiffs, Systems Research ("Research") and Systems Control
("Control") are both licensed employment agencies engaged in the
business of securing employment for persons seeking employment
and for employers seeking employees. Since January 1, 1981,
Control has been counseling and advising solely on behalf of
employers. Both agencies employ placement counselors who
interview, advise applicants and employers, and arrange contacts
between employers and employees. The plaintiffs are cooperative
corporations and are not competitors.
Defendant, Random, Inc. ("Random") is an executive recruiting
agency engaged in the business of securing employees for
employers. Random has been a direct competitor of both plaintiffs
since September 20, 1980. Defendant Nordness was an employee of
plaintiff Control from June 15, 1979 to September 19, 1980.
Defendant Nordness is currently the president of Random
and its only shareholder, thereby controlling and dominating its
From April 18, 1977 to February 15, 1985, Mark Johnson was any
employment counselor for both plaintiffs. As an employment
counselor, Johnson was paid a percentage of the applicant's gross
salary when a job position was filled. By virtue of his position,
Mark Johnson stood in a fiduciary relationship with both
plaintiffs, owing them the duties of loyalty and fidelity.
Johnson became acquainted with defendant Nordness on about June
15, 1979. Nordness allegedly began to devise and participate in
a scheme to defraud plaintiffs as early as April 1982, with the
help of Johnson. According to the complaint, this scheme
consisted of the payment of money or promises of such payment to
Mark Johnson for making available to Nordness the names of
applicants without plaintiffs' consent. The complaint further
alleges that once these names were made available to Nordness, he
would contact the applicant and arrange an interview with the
respective hiring company. Upon a successful placement, Nordness
would collect a percentage of the applicant's gross salary.
In their complaint, plaintiffs allege that the names of
applicants contacted by the defendants, the placement fee charged
by defendants, and the scheme to defraud was furthered by use of
the mails and the telephone, in violation of 18 U.S.C. § 1341
and § 1343. Plaintiffs further allege that these violations
constitute participation in an enterprise which affected
interstate commerce, thus violating 18 U.S.C. § 1961(4), the
Racketeer Influenced and Corrupt Organizations Act ("RICO").
Plaintiffs allege an aggregate loss of $37,800 and allege that
defendants used this income, derived from a pattern of
racketeering activity, in violation of 18 U.S.C. § 1962(a).
Several pendent state claims arising under the common law of
Illinois are also alleged.
Defendants contend, initially, that plaintiffs fail to plead a
"pattern of racketeering activity" as required by 18 U.S.C. § 1961
and, alternately, that the complaint fails to plead the acts
of mail and wire fraud with sufficient particularity under
A. Count I — Failure to Allege a Racketeering Enterprise Injury
In defendants' brief in support of their motion to dismiss,
defendants contend that Count I of the complaint fails to allege
a racketeering enterprise injury in accordance with 18 U.S.C. § 1964(c)
which provides that "any person injured in his business
or property by reason of a violation of § 1962 of this chapter
may sue therefor in any appropriate United States District Court
and shall recover threefold the damages he sustains and the cost
of the suit, including a reasonable attorney's fee." 18 U.S.C. § 1964(c).
While this motion was being briefed by the parties, the
existing case law surrounding what kind of injury is required to
satisfy "by reason of a violation of § 1962" was unclear. The
Second Circuit, in Sedima, S.P.R.L. v. Imrex Company, Inc.,
741 F.2d 482 (2d Cir. 1984), rev'd, ___ U.S. ___, 105 S.Ct. 3275, 87
L.Ed.2d 346 (1985), held that a plaintiff, in order to allege a
"racketeering injury," must show injury "different in kind from
that occurring as a result of the predicate acts
themselves. . . ." Id. at 496. Under this definition, the injury
must have been caused by "an activity which RICO was designed to
deter." Id. The Seventh Circuit, however, in Haroco v. American
National Bank, 747 F.2d 384 (7th Cir. 1984), aff'd, ___ U.S. ___,
105 S.Ct. 3291, 87 L.Ed.2d 437 (1985), chose to follow the less
demanding "pattern resulting from the predicate acts" standard.
Obviously the two are not consistent and defendants implore this
Court to either follow the Second Circuit or stay its
determination until the Supreme Court has decided the issue. As
the Supreme Court has timely made its determination in favor of
the Seventh Circuit interpretation, this is no longer an issue.
In Sedima, S.P.R.L. v. Imrex Co., Inc., ___ U.S. ___, 105 S.Ct.
3275, 87 L.Ed.2d 346 (1985), the Supreme Court reversed the
Second Circuit's holding in Sedima, stating that racketeering
activity is to be construed as "no more and no less than
commission of a predicate act" and that if the defendant "engages
in a pattern of racketeering activity forbidden by these
provisions, and the racketeering activities injure the plaintiff
in his business or property, the plaintiff has a claim under §
1964(c)." Id. at ___, 105 S.Ct. at 3286. The Court held that "a
violation of § 1962(c) ...