United States District Court, Northern District of Illinois, E.D
August 28, 1985
BURTON MORGAN AND MARGARET MORGAN, PLAINTIFFS,
BANK OF WAUKEGAN, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
Margaret and Burton Morgan ("Morgans") have sued a diverse
group of defendants, seeking to ground federal jurisdiction in
the Racketeer Influenced and Corrupt Organizations Act
("RICO"), 18 U.S.C. § 1961-1968,*fn1 and adding several
pendent state claims. Various of the defendants have moved to
dismiss the Third Amended Complaint (the "Complaint") under
Fed.R.Civ.P. ("Rule") 12(b)(6). Because the fourth time has not
proved the charm, the motion is granted.
This Court's opinions normally begin with a statement of the
facts. On Rule 12(b)(6) motions, the "Facts" section is
invariably footnoted with the following statement or one much
As always with respect to a motion to dismiss, the
well-pleaded factual allegations of the Complaint
are taken as true, with all reasonable factual
inferences drawn in plaintiff's favor. Wolfolk v.
Rivera, 729 F.2d 1114, 1116 (7th Cir. 1984). That
approach of course involves no actual findings of
That task is really impossible here, for whatever else may be
said of the Complaint, it is not "well-pleaded." Morgans'
counsel has followed three earlier sprawling and unintelligible
efforts at pleading a civil RICO cause of action with a current
version that is little improved and does not permit of ready
This Court is of course fully aware of its responsibilities
in reading a complaint under Hishon v. King & Spalding,
467 U.S. 69, ___, 104 S.Ct. 2229, 2233, 81 L.Ed.2d 59
(1984) (reconfirming the principles of Conley v. Gibson,
355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957)). But
Rule 8(a) still requires of a complaint "a short and plain
statement of the claim showing that the pleader is entitled to
relief," modified only (where as here the heart of the
Complaint lies in fraud charges) that "the circumstances
constituting fraud . . . shall be stated with particularity"
(Rule 8(b)). See, e.g., Tomera v. Galt, 511 F.2d 504, 508 (7th
Cir. 1975). And lawyering is after all the job of the lawyer,
not the Court, in the first instance. If a lawyer seeking to
invoke civil RICO has difficulties with its statutory roadmap
(referred to by Judge Posner in Sutliff, Inc. v. Donovan Cos.,
727 F.2d 648, 652 (7th Cir. 1984) as "constructed on the model
of a treasure hunt"), he or she need only refer to a solid law
review treatment that provides a checklist as to what must be
In this case this Court issued a short August 6, 1984
memorandum opinion and order dismissing the initial complaint
and attempting to steer counsel in the right direction.
Thereafter, loath to expend further effort in writing unless
and until counsel restructured the complaint in manageable
form, it has ruled orally — most recently dismissing the
Second Amended Complaint and referring counsel to the
then-brand-new law review article cited in n. 2 of this
opinion. Yet counsel has still not provided any meaningful
designation of the "enterprise" involved, and hence just how
the charged "persons" are connected to that enterprise, in the
manner required to state a Section 1964(c) cause of action
based on a violation of Section 1962(a) or 1962(c).
That failure, plus a recognition of the proper division of
labors between counsel and court, would be enough to send
Morgans back to the drawing board. But a critical intervening
event, the definitive ruling on other aspects of civil RICO by
the Supreme Court in Sedima, S.P.R.L. v. Imrex Co., ___ U.S.
___, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985), occasions this
expansion on what has already been said to Morgans' counsel
more than once.
There is no gainsaying much of the federal judiciary has had
a feeling of unease about the broad sweep of civil RICO.*fn3
No other explanation suggests itself, for example, for the
extraordinary tour de force in which the Court of Appeals for
the Second Circuit (albeit in a group of sharply-split
decisions) constructed such imaginary requirements as the one
demanding a defendant to have been criminally convicted of a
RICO violation as a prerequisite to liability under civil RICO
— an aberration it took the Supreme Court to correct in
Sedima. And that was only one of the manifestations of
discomfort of federal judges at the notion Congress had,
somehow unwittingly, created federal question jurisdiction over
what had traditionally been state court preserves —
"garden-variety fraud" implemented (as it would almost
invariably be) by mailings or by interstate-commerce-connected
As often happens, the sense of disquietude — the nagging
sense that something is wrong, though it is difficult to put a
finger on just what — was sound, even though the perceived
ailment was mistaken. Sedima, 105 S.Ct. at 3285 n. 14 and 3287
(though in dictum) supplied the clue that the courts had been
mistaken in viewing two mailings — a necessary ingredient
under Section 1961(5) of a "pattern of racketeering activity"
violating Section 1962 — as a sufficient condition to
establish such a "pattern."
This Court has recently responded to the Supreme Court's
invitation for "the courts to develop a meaningful concept of
`pattern'" (Sedima, 105 S.Ct. at 3287) in Northern Trust
Bank/O'Hare, N.A. v. Inryco, Inc., 615 F. Supp. 828 (N.D.Ill.
1985), and it will continue to do so here.
As already stated, it is hard to decipher precisely what
Morgans' cause of action is when sought to be placed in the
RICO matrix. But as best this Court can determine, Morgans'
claim is that somehow the 1978 sale to them of a 20% interest
in what they call the "venture" — certain drug stores — was
part of a plot to divest Morgans of both their initial cash
investment and their home (put up as security for the loans
obtained to provide further capital for the "venture"). If this
Court assumes (as it must in its efforts to read the Complaint)
all the alleged conspirators engaged in a single plot, though
spread over several years from its hatching in 1978 to its
coming to fruition in 1982, Morgans have not satisfied the
"pattern of racketeering activity" requirement as articulated
in Inryco, 615 F. Supp. at 831-33.
There may be one other possibility that has occurred to this
Court, though it is not even hinted at in Morgans' four efforts
to state their claim. If the complained-of acts were somehow
said to represent "repeated criminal activity, not merely
repeated acts to carry out the same criminal activity" (id. at
831), thus perhaps meeting the "pattern" requirement,*fn4 it
would appear highly likely much if not most of the earlier
activity would be outlawed by limitations.*fn5 In any event
Morgans cannot really have it both ways, and there is at least
a substantial likelihood — judging by their performance to
date — they may not have it either way, at least in federal
Morgans' RICO claim as asserted in the Complaint is
accordingly dismissed. Because they have shown no ability to
state such a claim despite repeated efforts, and because their
other claims are wholly pendent, lacking an independent basis
for federal jurisdiction, the entire Complaint and this action
are accordingly dismissed. By definition such dismissal is
without prejudice to Morgans' right to pursue their claims in
a court of competent jurisdiction.