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NOW, INC. v. SCHEIDLER

July 25, 1995

NATIONAL ORGANIZATION FOR WOMEN, INC., and its women members and other women who use or may use the services of women's health centers that provide abortions; DELAWARE WOMEN'S HEALTH ORGANIZATION, INC., and SUMMIT WOMEN'S HEALTH ORGANIZATION, INC., on behalf of themselves and all other similarly-situated clinics, Plaintiffs,
v.
JOSEPH M. SCHEIDLER; PRO-LIFE ACTION LEAGUE, INC.; RANDALL A. TERRY; ANDREW SCHOLBERG; CONRAD WOJNAR; TIMOTHY MURPHY; MONICA MIGLIORINO; VITAL-MED LABORATORIES, INC.; PROJECT LIFE; and OPERATION RESCUE, Defendants.



The opinion of the court was delivered by: DAVID H. COAR

 INDEX

 Background

 I. Res Judicata

 
A. Legal Standard for Res Judicata
 
B. Applicability of Res Judicata to the Parties
 
1. NOW
 
2. Wojnar
 
a. Identity of the Parties
 
b. Identity of Causes of Action
 
c. Final Judgment on the Merits

 II. Supplemental, Ancillary, or Pendent Jurisdiction Over Vital-Med

 
A. Applicability of 28 U.S.C. § 1367
 
B. History of Supplemental Jurisdiction
 
1. Application to Vital-Med
 
2. Application to Wojnar

 III. Failure to State A Claim

 
A. Proximate Cause and Standing
 
1. Standing
 
a. DWHO & Summit
 
b. NOW
 
2. Requirement of Predicate Act as Proximate Cause
 
B. Pleading Deficiencies
 
1. Hobbs Act Pled--Mandated Issue
 
2. Pleading a RICO Conspiracy
 
3. Other Predicate Acts
 
a. Travel Act and State Law Extortion as Predicate Acts
 
b. Theft of Fetal Remains as Predicate Act
 
C. Availability of Injunctive Relief

 IV. First Amendment Concerns

 
A. Freedom of Speech

 V. Constitutionality of RICO

 
A. Vagueness
 
B. Overbreadth

 VI. Conclusion

 Background

 This nine-year-old case has a long and convoluted history, portions of which must be reviewed in order to understand the issues before the court. For a more detailed exposition of the facts and procedural history of this case, please refer to NOW v. Scheidler, U.S. , 113 S. Ct. 2958, 125 L. Ed. 2d 659 (1993).

 In 1986, plaintiffs National Organization for Women ("NOW"), and two women's health centers brought this action against various anti-abortion activists, anti-abortion organizations, and a pathology testing laboratory. They alleged that defendants conspired to drive out of business health centers that provide abortion services. Plaintiffs contended that defendants committed extortion, engaged in physical and verbal intimidation, destroyed property, orchestrated phone campaigns to tie up clinic phone lines, made false appointments at the clinics, and disrupted the clinics' relationship with their landlords--all in violation of the Sherman Antitrust Act and sections 1962 (a), (c) and (d) of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). Plaintiffs also raised several pendent state claims.

 On May 28, 1991, the district court dismissed the Second Amended Complaint. NOW v. Scheidler, 765 F. Supp. 937 (N.D.Ill. 1991). The court held the Sherman Act inapplicable to the conduct alleged in the complaint because defendants' conduct was incidental to a valid effort to influence governmental action and therefore immune. The court dismissed the § 1962(a) RICO claim because defendants' receipt of donations from supporters was not income derived from racketeering. The § 1962(c) RICO claim was dismissed because the court concluded that RICO requires that economic motive be alleged. The RICO conspiracy count was dismissed because all substantive RICO counts failed. The state law claims were also dismissed because the dismissal of the claims based on federal law destroyed the basis for jurisdiction over the state law claims. The plaintiffs appealed.

 On June 29, 1992, the Court of Appeals for the Seventh Circuit affirmed the district court's dismissal. NOW v. Scheidler, 968 F.2d 612 (7th Cir. 1992). The plaintiffs sought and obtained a writ of certiorari from the United States Supreme Court limited to the question of whether a RICO violation required motivation by an economic purpose. NOW v. Scheidler, U.S. , 113 S. Ct. 2958, 125 L. Ed. 2d 659 (1993).

 On January 24, 1994, the Supreme Court reversed. NOW v. Scheidler, U.S. , 114 S. Ct. 798, 127 L. Ed. 2d 99 (1994). The Court held that RICO does not require proof that either the alleged racketeering enterprise or the predicate acts of racketeering were motivated by an economic purpose. In a concurring opinion, Justice Souter emphasized that although the First Amendment does not require reading an economic motive into the unambiguous RICO statute, legitimate free speech issues may be implicated in this case. Justice Souter advised that those concerns should be addressed as they arise. The defendants petitioned for a rehearing, which was denied on March 21, 1994. NOW v. Scheidler, 114 S. Ct. 1340, 127 L. Ed. 2d 688 (1994).

 On October 3, 1994, in an unpublished opinion, the Seventh Circuit recapitulated the Supreme Court's opinion. The Court of Appeals directed the district court to address the issue of whether the predicate acts alleged in the complaint in fact violated the Hobbs Act (18 U.S.C. § 1951). The court specifically reaffirmed its original dismissal of the Sherman Act count and RICO § 1962(a). The court further stated:

 
The Supreme Court's decision reinstated count 3 (RICO § 1962(c)) and count 4 (RICO § 1962(d)). Counts five, six, and seven, which allege violations of state law, survive as well pursuant to the district court's supplemental jurisdiction. See 28 U.S.C. § 1367.
 
Also on remand, if necessary, the district court should consider which of the defendants' activities, as alleged, are protected by the First Amendment to the United States Constitution. See Scheidler, 114 S. Ct. at 806 n. 6. As Justice Souter pointed out in his concurring opinion, "even in a case where a RICO violation has been validly established, the First Amendment may limit the relief that can be granted against an organization otherwise engaging in protected expression." Id. at 807 (Souter, J., concurring). This includes Hobbs Act extortion--the sole RICO predicate act alleged by plaintiffs in both their complaint and their RICO Case Statement.

  NOW v. Scheidler, 25 F.3d 1053, 1994 WL 196761 **2 (7th Cir. 1994). The case was remanded to the district court for further proceedings.

 Before the district court could comply with the mandate of the Court of Appeals, the plaintiffs filed a motion for leave to file a third amended complaint. On October 21, 1994, Judge Holderman granted plaintiffs' motion and ordered plaintiffs to file an updated RICO case statement (Tr. p. 31). The Third Amended Complaint (hereinafter the "Complaint") has four counts.

  Count I of the Complaint is brought by all plaintiffs *fn1" and alleges violations against all defendants except Vital-Med Laboratories, Inc. ("Vital-Med"). *fn2" Count I also alleges that the defendants violated RICO by participating in the Pro-Life Action Network ("PLAN"), which the plaintiffs allege is an enterprise as defined by 18 U.S.C. § 1961(4). Several distinct predicate acts are alleged under count I. These acts include attempted arson, murder, and various Hobbs Act violations. Count II of the Complaint alleges that all defendants except Vital-Med conspired to violate the RICO Act. Count III is brought by DWHO and Summit and alleges that defendants Scheidler, Scholberg, Murphy, Migliorino, Wojnar, and PLAL tortiously interfered with the plaintiffs' prospective economic advantage. Count IV is brought by Summit alone and alleges that defendant Migliorino tortiously interfered with an existing business relationship between Summit and Summit's prospective lessor. Count V is brought by DWHO and Summit against only Vital-Med for breach of duty of confidentially.

 This case was transferred to the undersigned by Executive Order dated November 8, 1994. On February 7, 1995, this court denied several sanctions motions and motions to reconsider the grant of leave to file a Third Amended Complaint. NOW v. Scheidler, 897 F. Supp. 1047, 1995 WL 59228 (N.D.Ill. 1995).

 Defendants now move to dismiss the Third Amended Complaint. [Docket numbers 768, 774, 776, 784, 787]. All motions are fully briefed and ripe for decision. Although the Defendants have filed separate motions and replies, the motions raise similar, though not identical, issues. To the extent possible, the court will address the various Defendants' arguments together. However, several of the arguments do not lend themselves to one coherent treatment. *fn3"

 I. Res Judicata

 Defendants make two res judicata arguments. First, they allege that NOW is barred from being a plaintiff under the Third Amended Complaint because it suffered a final dismissal of its claims under the Second Amended Complaint. Second, Wojnar argues that he has obtained a final dismissal of all claims alleged against him and, therefore, res judicata should protect him from having to further defend himself in this litigation.

 Res judicata is a judicial doctrine designed to ensure the finality of judicial decisions. Brown v. Felsen, 442 U.S. 127, 131, 99 S. Ct. 2205, 2209, 60 L. Ed. 2d 767 (1979); Car Carriers, Inc. et al. v. Ford Motor Co. et al., 789 F.2d 589, 593 (7th Cir. 1986). It is a "rule of fundamental and substantial justice," Hart Steel Co. v. Railroad Supply Co., 244 U.S. 294, 299, 37 S. Ct. 506, 507, 61 L. Ed. 1148 (1917); Car Carriers, 789 F.2d at 593, whose enforcement is essential to the maintenance of social order, "for the aid of judicial tribunals would not be invoked for the vindication of rights of person and property if . . . conclusiveness did not attend the judgments of such tribunals." Alexander v. Chicago Park District, 773 F.2d 850, 853 (7th Cir. 1985) (quoting Nevada v. United States, 463 U.S. 110, 129, 103 S. Ct. 2906, 2918, 77 L. Ed. 2d 509 (1983)).

 
Preclusion occurs under two theories: issue preclusion and claim preclusion. Claim preclusion bars relitigation of claims or issues which were or could have been raised in a prior suit on the merits between the same parties or their privies. Plaintiffs' claims are merged in the judgment for plaintiff while judgment for defendants acts to bar any further claims by plaintiff against the defendant. It is usually referred to as res judicata . . . Issue preclusion prevents relitigation of a matter of fact of law that was previously litigated and decided. See Jones v. City of Alton, 757 F.2d 878, 879 n.1 (7th Cir. 1985). It is usually referred to as collateral estoppel.

  Alexander, 773 F.2d at 853.

 Res judicata promotes accuracy (leaving in place properly decided cases), efficiency ("it is in the interest of the state that there be an end to litigation"), and fairness ("no person should be twice vexed by the same claim"). Friedenthal, et al., Civil Procedure 617 (1993), see Robert Ziff, Note, For One Litigant's Sole Relief: Unforeseeable Preclusion and the Second Restatement, 77 Cornell L. Rev. 905, 910 (1992).

 A. Legal Standard for Res Judicata

 There are three threshold requirements to be considered in applying res judicata: (1) identity of the parties or their privies; (2) identity of the causes of action; and (3) a final judgment on the merits. Car Carriers, 789 F.2d at 595 n.9; Alexander, 773 F.2d at 854; Lee v. City of Peoria, 685 F.2d 196, 199 (7th Cir. 1982). A court must find each of these threshold requirements in order to apply res judicata as a bar.

 The doctrine of res judicata is generally applied to a single "cause of action." The Court of Appeals in this circuit employs the "same transaction" test to define a "cause of action." Car Carriers, 789 F.2d at 593; Alexander, 773 F.2d at 854; Wakeen v. Hoffman House, Inc., 724 F.2d 1238, 1241 (7th Cir. 1983). Under the same transaction test, a "cause of action" consists of a "'single core of operative facts' which would give rise to a remedy." Car Carriers, 789 F.2d at 593 (quoting Alexander, 773 F.2d at 854). The "same transaction" test is fact-oriented, and provides that once a transaction has caused injury, all claims arising from that transaction must be brought in the same suit or be lost. Car Carriers, 789 F.2d at 593.

 B. Applicability of Res Judicata to the Parties

 1. NOW

 Defendants Terry, Project Life, and Operation Rescue (hereinafter the "Terry Defendants") and Defendants Scheidler, Scholberg, Murphy, and PLAL (hereinafter the "Scheidler Defendants") argue that res judicata bars NOW, and only NOW, from bringing RICO claims against them. The Terry Defendants argue that NOW suffered a final, undisturbed judgment when the Second Amended Complaint was dismissed. They argue that in the Second Amended Complaint, NOW claimed injury only under the Sherman Act and that the dismissal of the Sherman Act claims was undisturbed by the Supreme Court. Accordingly, the Terry Defendants claim that res judicata bars NOW from asserting a new claim arising from the same set of operative facts after a final decision on the merits of the original claim. Thus, they argue, under the "same transaction" test, NOW should be precluded from prosecuting the Third Amended Complaint.

 The plaintiffs argue that NOW did allege RICO claims in the Second Amended Complaint, and that those claims remain viable after the Supreme Court's reversal of the prior orders of dismissal. Thus, the first task is to determine whether NOW was a plaintiff as to the RICO counts in the Second Amended Complaint. If the answer is yes and those counts were revived by the decision of the Supreme Court, res judicata is not applicable because there has been no final decision on the merits. This determination is made difficult by the fact that not every named plaintiff made claims against every named defendant in the Second Amended Complaint.

 Before turning to the specific language relied upon by the parties. a description of the layout of the Second Amended Complaint is helpful. Paragraphs one through three are contained in a subsection of the complaint titled "NATURE OF THE ACTION." Paragraph four deals with jurisdiction. Paragraphs five through eight are captioned "PLAINTIFFS." Paragraphs nine through twenty appear under a "DEFENDANTS" heading. Paragraphs twenty-one through thirty-seven describe "CLASS ALLEGATIONS." Paragraphs thirty-eight through fifty-five are captioned "FORMATION OF THE PRO-LIFE ACTION NETWORK." Paragraphs fifty-six through sixty-three explain the "CARRYING OUT OF PLAN'S AGENDA: OPERATION RESCUE." Paragraphs sixty-four through seventy-eight appear under a "THEFT OF FETAL REMAINS" caption. Paragraph seventy-nine is the beginning of the actual substantive counts of the complaint; each count realleging the facts contained in the previous paragraphs. Over half the allegations in the complaint are not contained within a "count." This makes interpretation of the complaint difficult because, as will become clear, the complaint contains both specific allegations brought by specific defendants as well as general allegations which, read alone, do not always make clear which plaintiff is making the assertion.

 In the first paragraphs under the RICO counts subheadings (counts II, III, and IV) the Second Amended Complaint states that the counts were brought by "plaintiffs DWHO and Summit and the class they represent." (Second Am. Compl. PP 94 *fn4" , 106, *fn5" 111, *fn6" ). NOW takes the position that paragraphs one, three, twenty-two, 105, and 110 of the Second Amended Complaint support its conclusion that it was a RICO plaintiff in the Second Amended Complaint.

 Paragraph one *fn7" outlines the law to be used to justify the relief sought: to obtain declaratory and injunctive relief. Paragraph one thus logically encompasses both the alleged RICO violations and the alleged Sherman Act violations (because both such allegations are made later in the complaint under specific counts) by stating "this is a civil action pursuant to . . . the Sherman Antitrust Act . . . [and] . . . RICO." Thus, paragraph one does identify NOW as a plaintiff, but not necessarily as a RICO plaintiff.

 Paragraph three *fn8" is no more enlightening. This paragraph does not identify which Count it refers to and does no more than explain that NOW believed it had organizational standing to sue under the Sherman Act (see infra). Nothing in the paragraph could be logically construed to support plaintiffs' allegation that NOW was a RICO plaintiff.

 Paragraph twenty-two, *fn9" though lengthy, provides no additional support for the plaintiffs' position. The paragraph appears under a "Class Allegations" subdivision of the complaint and tracks the requirements of organizational standing. See infra at 31. Indeed, the paragraph states that NOW wishes to represent the class in order to obtain declaratory and injunctive relief. That form of equitable relief was only requested under the Sherman Act count of the Second Amended Complaint.

 Paragraph 1051 *fn10" is part of count II which alleges violations of RICO section 1962(a). The section 1962(a) count of the Second Amended Complaint was not reinstated by the Seventh Circuit or the Supreme Court. Count II states that it is brought "by plaintiffs DWHO and Summit and the class they represent . . . "(Second Am. Compl. P 94). However, paragraph 105 does plainly state that "the RICO Defendants' activities have injured the plaintiff class of female NOW members. . . " Paragraph 110 *fn11" is part of court III, alleged under RICO section 1962(c), and incorporates the injuries in paragraph 105. Count III was also stated to have been brought by "plaintiffs DWHO and Summit and the class of clinics they represent. . ." (Second Am. Compl. P 106). Although the section 1962(a) claims in count II were not reinstated, count III (the section 1962(c) claim) was reinstated. By asserting that NOW and its members have been injured by violation of section 1962(c), NOW asserted status as a RICO plaintiff. Although not specifically stating that it brought RICO claims in paragraphs 106 and 111, NOW did plead specific facts and injury sufficient to state a claim for relief under both sections 1962(c) and (d) because it alleged the conduct that violated the statute and that NOW was injured by that conduct. See Luckett v. Rent-A-Center, Inc., 53 F.3d 871 (7th Cir. 1995); La Porte County Republican Central Comm. et. al. v. Bd. of Comm'rs of La Porte, 43 F.3d 1126 (7th Cir. 1994); Mid-American Title Co. v. Kirk, 991 F.2d 417, 422 (7th Cir. 1993); Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1078 (7th Cir.1992). NOW did all that is required to state a claim under RICO section 1962(c) and (d) in the Second Amended Complaint; it stated that it had been injured because of the defendants' actions that violated RICO. *fn12" Therefore, NOW is not barred from making RICO allegations in the Third Amended Complaint because it made the same allegations, albeit less elaborately and eloquently, in the Second Amended Complaint. This interpretation gives a reasonable interpretation to both the allegations contained in paragraph 94 and 106 (which are alleged by DWHO and Summit) as well as paragraphs 105 and 110 (which include NOW as an injured party, and therefore as a party making a claim under the count). See Restatement (Second) Contracts § 203(a) (year) ("an interpretation which gives a reasonable, lawful, and effective meaning to all terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect."). NOW was a RICO plaintiff in the Second Amended Complaint, and it will be allowed to continue in that vein in the Third Amended Complaint.

 2. Wojnar's Res Judicata Argument Against All Plaintiffs

 Defendant Conrad Wojnar argues that res judicata operates to bar all Plaintiffs from bringing RICO claims against him. Wojnar claims that in the Second Amended Complaint he was charged only with violations of the Sherman Act antitrust count (count I) and under pendent state law. Because the dismissal of the Sherman Act claims was left undisturbed, Wojnar concludes that res judicata bars the prosecution of the Third Amended Complaint's RICO allegations, as to him.

 Plaintiffs argue that because the preclusive effect of res judicata is only available where a final judgment has been entered, Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n.5, 58 L. Ed. 2d 552, 99 S. Ct. 645 (1979), the doctrine is not available to Wojnar because the dismissal was reversed. Furthermore, the Plaintiffs argue that because the Wojnar was a defendant as to a state law claim under the Second Amended Complaint, Wojnar has not suffered a final dismissal and therefore no final judgment has been issued against him.

 The court will analyze Wojnar's res judicata argument using the standard set forth above of identity of parties, identity of causes of action, and finality of judgment. Car Carriers, 789 F.2d at 595 n.9; Alexander, 773 F.2d at 854; Lee v. City of Peoria, 685 F.2d 196, 199 (7th Cir. 1982).

 a. Identity of the Parties

 The first prong in the analysis of whether res judicata applies is whether the parties in the first and second actions are identical. Car Carriers, 789 F.2d at 595 n.9; Alexander, 773 F.2d at 854; Lee v. City of Peoria, 685 F.2d 196, 199 (7th Cir. 1982). The identity of the parties is not in dispute; the parties are identical for the purposes of this motion.

 b. Identity of Causes of Action

 The second prong of the analysis is whether the causes of action in the first and second actions are identical, under the "same transaction" test as defined by the Seventh Circuit. Car Carriers, 789 F.2d at 595 n.9; Alexander, 773 F.2d at 854; Lee v. City of Peoria, 685 F.2d 196, 199 (7th Cir. 1982). If the causes of action arise out of the "same transaction," the suits are identical for purposes of res judicata. Id. There is no serious contention that the claims against Wojnar in the Second Amended Complaint and those in the Third Amended Complaint do not arise from the same set of operative facts.

 c. Final Judgment on the Merits

 Included in the Second Amended Complaint was also count V against Wojnar alleging "tortious interference with prospective economic advantage" under state law. *fn13" It was alleged that the district court had supplemental jurisdiction over that and other state law counts. After the remand from the Supreme Court, the Court of Appeals stated that "counts five, six, seven, which allege violations of state law, survive as well pursuant to the district court's supplemental jurisdiction. See 28 U.S.C. § 1367." NOW v. Scheidler, 25 F.3d 1053, 1994 WL 196761 *2. Plaintiffs seize upon that language to argue that if the state law claims survive and this court retains jurisdiction over them, then there could not have been a final judgment on the merits for res judicata purposes. There are several things wrong with Plaintiff's position: First, the quoted statement by the Court of Appeals is dicta; second, once the order of dismissal of Count I became final, this court ceased to have jurisdiction over count V of the Second Amended Complaint; and third, Plaintiffs misconstrue the operation of res judicata in this circumstance. Count I of the Second Amended Complaint stated a claim as to which this court had federal question jurisdiction. Count V stated a claim as to which this court had supplemental jurisdiction because of its relationship to the issues raised in count I; what was previously called "pendent claim" jurisdiction. Finley v. United States, 490 U.S. 545, 548, 109 S. Ct. 2003, 2006 (citing United Mine Workers v. Gibbs, 383 U.S. 715, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966); Hurn v. Oursler, 289 U.S. 238, 53 S. Ct. 586, 77 L. Ed. 1148 (1933); Siler v. Louisville & Nashville R. Co., 213 U.S. 175, 29 S. Ct. 451, 53 L. Ed. 753 (1909)). Count I was dismissed because the district court concluded that the Sherman Act was not applicable to the conduct alleged in the Second Amended Complaint. Res judicata should bar the Plaintiffs from now amending the complaint to allege a new (RICO) theory in connection with the same alleged conduct without regard to whether there remain unresolved state law claims. A brief example demonstrates why this is so. If the allegations against Wojnar contained in count V had been made in a separate state complaint rather than in the same (federal) complaint as count V, and the federal claim had been dismissed, there is no logical reason why res judicata should not bar Plaintiffs from filing a new federal complaint asserting a different (federal) legal theory as to Wojnar, but based upon the same operative facts. In the example, the existence of the state claim is irrelevant to the question of whether res judicata should apply to the federal claim.

 Plaintiffs claims against Wojnar are barred by res judicata and will be dismissed.

 II. Supplemental, Ancillary, or Pendent Jurisdiction Over Vital-Med

 As the only claim against Vital-Med is stated under state law, it is clear that claim is not supplemental to any federal ...


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