The opinion of the court was delivered by: MILTON I. SHADUR
In principal part the Opinion raised the question whether under Richmond's initial pleading defendants' claimed violation of Section 1962 as to Richmond had been perpetrated by statutory "persons" (Section 1961(3)) distinct from the statutory "enterprise" (Section 1961(4)). Thus the Opinion called counsel's attention to some relevant case law and to a leading RICO treatise, then concluded by directing Richmond's counsel to file both an amended Complaint and an accompanying RICO case statement conforming to the standing order that has been adopted by a number of District Judges (not including this one) in all RICO cases.
In response Richmond's counsel did indeed file an Amended Complaint (for convenience the "Complaint"), again including one RICO count and three state-law counts, coupled with a response to the RICO case standing order. Defendants then filed a motion to dismiss the Complaint, and that motion has been fully briefed and is now ripe for decision. For the reason stated in this memorandum opinion and order, the motion is granted and this action is dismissed as well.
To begin with, this Court of course grants defendants' motion to strike the Appendices to Richmond's responsive memorandum, which set out a number of items extraneous to the Complaint. Where as here a Fed. R. Civ. P. ("Rule") 12(b)(6) motion is at issue, the Complaint itself is the only grist for the Court's mill--and for that purpose Richmond's well-pleaded allegations are accepted as true, together with reasonable inferences in Richmond's favor ( Bowman v. City of Franklin, 980 F.2d 1104, 1107 (7th Cir. 1992)). Whether defendants are right in characterizing opposing counsel's uncalled-for tendering of the contents of the Appendices as "attempts to prejudice this Court" (D. R. Mem. 1 n.1) is irrelevant, though defense counsel are surely correct in saying that "plaintiff's counsel is a seasoned practitioner" who knows better (id.).
That collateral issue aside, for present purposes this Court will pass over several issues that are also raised by defendants' motion: their contentions that the Complaint's allegations are insufficient to meet RICO's "pattern" requirement, that the Complaint's allegations of fraud are not particularized enough to meet the requirement of Rule 9(b) and that those same allegations do not set out the multiple acts of mail fraud necessary to satisfy that same "pattern of racketeering activity" definition (Section 1961(5)). Instead this opinion will again focus upon the related "person" and "enterprise" requirements that were originally drawn to counsel's attention months ago in the Opinion.
As that earlier Opinion at 3 pointed out, the "requirement of a separate 'person' and 'enterprise' in the civil RICO context has been plain ever since our Court of Appeals led the way for other Courts of Appeals in so ruling in Haroco v. American Nat'l Bank & Trust Co., 747 F.2d 384, 400-01 (7th Cir. 1984), aff'd on other grounds, 473 U.S. 606, 105 S. Ct. 3291, 87 L. Ed. 2d 437 (1985)."
Richmond's counsel has sought to respond to that requirement by identifying two purported "enterprises":
2. To describe the other "enterprise," counsel refers to the same persons and entities that make up the first one plus auto dealers "with which [the first 'enterprise'] maintains relationships and from which it purchases retail installment contracts" (Complaint P 44(b)).
Here is what Complaint PP 14 and 16 say about defendants and their affiliates:
14. Nationwide Group. Cassel, Nationwide and NAC are part of a group of corporations, entities and individuals which are, and have been for a number of years, associated in fact on an ongoing basis for the purpose of conducting business in selling and financing automobiles, related intangible products (warranties, service contracts, credit life insurance, credit health and accident insurance), as well as other goods and services. The group will be referred to herein as the "Nationwide Group."
16. All of the companies and entities named in PP 14-15 are under common control and are operated in concert with one another. The ultimate owner of a controlling interest in all is in a single family of individuals, the Lutz family, members of which are also included in the Nationwide Group. As a practical matter, all of the companies and entities named in PP 14-15 are operated as if they were 100% owned subsidiaries of a common parent.
Complaint P 17 reflects that Nationwide owns 99% of Cassel, so that it and NAC together have the total ownership of the Cassel limited partnership. Finally, Complaint PP 44(b) says nothing at all about the auto dealers except the purely conclusory allegation that they are part of the second claimed "enterprise." Those are the totality of the Complaint's allegations against which RICO's statutory requirements must be applied.
For that purpose it must be remembered just why Haroco and other cases demand that the "person" charged with violating Section 1962(c) must be distinct from the RICO "enterprise." What Section 1962(c) renders illegal is the conduct of the "person" that is associated with the "enterprise" in "conduct[ing] or participating, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity. . . ." In that respect the basic problem of Richmond's counsel is that described by Shakespeare when he said "Thy wish was father . . . to that thought."
Richmond cannot meet the demands of RICO just by naming a string of entities that assertedly make up an "association in fact" (even though under proper circumstances such an association can indeed be an "enterprise" for RICO purposes