MEMORANDUM OPINION AND ORDER
PAUL E. PLUNKETT, UNITED STATES DISTRICT JUDGE
This case was originally filed in the Circuit Court of Cook County, but was removed to this court pursuant to 28 U.S.C. § 1441 because the complaint asserts a claim under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. ("RICO"). The complaint includes three counts: RICO conspiracy pursuant to 18 U.S.C. § 1962(d), retaliatory discharge, and defamation. The latter two counts are pendent state law claims. Defendants Kemper Financial Services, Inc. ("Kemper") and Thomas H. Richards ("Richards") have filed motions to dismiss all three counts for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6).
For the reasons that follow, we find that we do not have subject matter jurisdiction over the RICO count; consequently, we dismiss Count III and remand the remaining pendent claims.
The plaintiff, Carolyn M. Schiffels ("Schiffels") was employed by defendant Kemper as an Administrative and Trading Assistant in Kemper's equity options unit from February 1986, until her employment was terminated on February 15, 1990. Schiffels' supervisor was defendant Richards, a first vice president of Kemper in charge of the equity options unit in the Investment Department.
Defendant Kierscht was president, defendant Engling was general counsel, and defendant Serpe was director of human resources at Kemper.
The cause of action arises out of Schiffels' allegations that Richards, who managed two public mutual funds (Kemper Option Income Fund and Investment Portfolios, Inc. Option Income Fund) and a portion of the Kemper Financial Services Profit Sharing Plan ("KFS Plan"), was engaged in some shady trading designed to benefit the KFS Plan at the expense of the two option income funds' shareholders. Schiffels maintains that for the better part of 1987, Richards initially placed orders for S & P 500 futures contracts without designating the appropriate Kemper account (Compl., para. 12). Rather, he allegedly waited until the close of the trading day to allocate the profit-making deals to KFS Plan, hoping to close out the other positions at little or no profits or losses (Compl., paras. 12, 13). However, during the first ten months of 1987, the income funds allegedly took losses amounting to about $ 40 million as a result of this scheme (Compl., para. 13).
Schiffels maintains that she expressed her concerns to Richards in April 1987, who relieved her of her responsibility for writing computer input tickets relating to his trade allocations (Compl., para. 15). In August 1987, Schiffels took her allegations to Richards' superior, Stephen Timbers, and in September 1987, to Kemper's legal department. Id.
In Count I, the retaliation claim, Schiffels alleges that the defendants entered into a conspiracy in October 1987 to further Richards' scheme by covering up Richards' fraud, undermining Schiffels' credibility, and discouraging other employees from making such disclosures (Compl., para. 7). She claims that the defendants accomplished this by punishing the plaintiff, isolating her, inducing her to change her allegations, and effecting changes in her employment. Id. She also maintains that defendants agreed not to report the losses to the boards and shareholders of the income funds (Compl., para. 18). She was allegedly mistreated by being placed on involuntary paid leave of absence from October 30, 1987, to March 16, 1988, while Kemper's auditors investigated her charges, being escorted out of her office, and being interrogated by Kemper attorneys and accountants (Compl., para. 19). In March 1988, Schiffels was given a new job at Kemper, which allegedly isolated her from any information that might have corroborated her claims (Compl., para. 21).
When the FBI began to investigate the Richards scheme in 1989 and a class action suit was filed by shareholders of the two equity option funds, Kierscht again put Schiffels on paid leave of absence, allegedly to punish and discredit her and to keep her from sources of information and from FBI investigators (Compl., para. 23). Finally, when Schiffels refused to resign after being told that she should look for alternative employment, she was terminated on February 15, 1990 (Compl., para. 24).
In the defamation count, Schiffels maintains that the defendants' treatment of her, including putting her on involuntary leave, escorting her out of the premises, transferring her to a job without duties and a desk in a corridor, and terminating her despite satisfactory performance "communicated the false and defamatory assertion that plaintiff had committed some serious breach of ethics or violation of the law" (Compl. para. 36) and that "this assertion was published to plaintiff's fellow employees at Kemper" (Compl., para. 37). She also claims that this conduct was malicious and that the defendants knew that the "assertion" was false (Compl., para. 39). As a result, Schiffels claims that she has been unable to obtain employment in financial services in Chicago, has suffered a damaged reputation, and is entitled to punitive and compensatory damages (Compl., para. 40).
Finally, in support of her RICO claim, Schiffels claims that KFS Plan is an "enterprise" for purposes of 18 U.S.C. § 1961 (4) that is engaged in interstate commerce, that the defendants are "persons" under 18 U.S.C. § 1961 (3) and that in furtherance of the scheme to defraud the shareholders, the defendants used the United States postal service in violation of 18 U.S.C. § 1341, and that use of the mails constituted a racketeering act (Compl., paras. 42-44). In para. 46 Schiffels further alleges that the scheme was "ongoing, threatened to continue into the future, and constituted a pattern of racketeering activity as defined by Title 18, U.S. Code, § 1961." Schiffels argues that she has been damaged by the overt acts in furtherance of the conspiracy and requests compensatory damages (trebled) and attorneys' fees.
Now defendants Kemper and Richards argue that Count III (RICO) should be dismissed for failure to state a claim because
1. the plaintiff lacks standing;
2. the complaint fails to plead either the alleged mail fraud or the RICO conspiracy with particularity; and