Brittingham v. Mobil Corp.

943 F.2d 297, 1991 WL 160487
CourtCourt of Appeals for the Third Circuit
DecidedAugust 23, 1991
DocketNos. 90-1989, 91-1019, 91-1025, 91-1034, 91-1035 and 91-1041
StatusPublished
Cited by114 cases

This text of 943 F.2d 297 (Brittingham v. Mobil Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brittingham v. Mobil Corp., 943 F.2d 297, 1991 WL 160487 (3d Cir. 1991).

Opinion

OPINION OF THE COURT

SCIRICA, Circuit Judge.

The district court granted summary judgment to defendants on the ground that plaintiffs failed to assert valid claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961-1968 (1988). We will affirm.

I.

In 1989, Mobil Chemical Company (“Mobil Chemical”) began producing and marketing Hefty “degradable” garbage bags. Mobil Chemical is an unincorporated division of defendant Mobil Oil Corporation (“Mobil Oil”), which in turn is a wholly-owned subsidiary of defendant Mobil Corporation (“Mobil”). The degradable bags were advertised as being less harmful to the environment than other types of bags. The package in which the bags were sold contained the following statement:

New Hefty Degradable Trash Bags contain a special ingredient that promotes their breakdown after exposure to elements like sun, wind and rain.
This ingredient promotes degradation without harming the environment. Once these elements have triggered the process, the bags will continue to break down into harmless particles even after they are buried in a landfill. New Hefty Degradable Bags have the same strength and durability you’ve come to expect from Hefty, and you don’t have to worry that they’ll degrade sitting on your shelf or at the curb. These bags have been specially formulated so they’re only activated by exposure to the elements. Hefty Degradable Bags — a step in our commitment to a better environment.

Plaintiffs are individual consumers who purchased the bags. Plaintiffs contend that these claims were false and misleading “because the bags will not degrade after being placed in a modern landfill, and the plastic will not even ‘break down’ into ‘harmless particles’ but will simply break into smaller plastic particles.” Complaint at 7-8. Similar allegations are also the subject of investigations by federal and state officials. Plaintiffs filed a class action suit in district court against Mobil and Mobil Chemical, alleging violations of RICO and asserting various pendent state law claims.1 The RICO claims asserted violations of 18 U.S.C. § 1962(a) and § 1962(c), and were predicated on alleged acts of mail and wire fraud committed by defendants in marketing the degradable bags. The RICO claims are the sole basis for federal jurisdiction.

Defendants filed a motion to dismiss under Fed.R.Civ.P. 12(b)(6). The district court did not rule on that motion, but di[300]*300rected the parties to conduct discovery on the limited issue of whether plaintiffs could demonstrate facts sufficient to sustain the RICO claims. Following this discovery, defendants filed a motion for summary judgment as to the RICO counts. The district court granted this motion and dismissed the remaining counts for lack of subject matter jurisdiction. This appeal followed.

We may affirm the grant of summary judgment only if “after considering the record evidence in the light most favorable to the nonmoving party, no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law.” Turner v. Schering-Plough Corp., 901 F.2d 335, 340 (3d Cir.1990). Our review is plenary. Id.

II.

Under 18 U.S.C. § 1964(c), any person injured in his business or property by reason of a violation of § 1962 may recover treble damages and attorney’s fees. Section 1962(c) provides in part that:

It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity....

The issue here is not whether defendants have participated in a “pattern of racketeering activity,” but whether the alleged “enterprise” is sufficiently distinct from the defendants.

A § 1962(c) violation requires a finding that the defendant “person” conducted or participated in the affairs of an “enterprise” through a pattern of racketeering activity. In B.F. Hirsch v. Enright Refining Co., Inc., 751 F.2d 628, 633-34 (3d Cir.1984), we held that the “person” charged with violation of § 1962(c) must be distinct from the “enterprise.” In addition to noting that the plain language of the statute provides that the person must be “employed by or associated with” — and therefore separate from — the enterprise, we stated that:

One of the Congressional purposes in enacting RICO was to prevent the takeover of legitimate businesses by criminals and corrupt organizations. It is in keeping with that Congressional scheme to orient section 1962(c) toward punishing the infiltrating criminals rather than the legitimate corporation which might be an innocent victim of the racketeering activity in some circumstances.

Id. at 633-34 (citations omitted).

We reaffirmed this holding in Petro-Tech, Inc. v. Western Co. of North America, 824 F.2d 1349 (3d Cir.1987), where we noted that “§ 1962(c) was intended to govern only those instances in which an ‘innocent’ or ‘passive’ corporation is victimized by the RICO ‘persons,’ and either drained of its own money or used as a passive tool to extract money from third parties.” Id. at 1359. In Petro-Tech, we extended the Enright rule, holding that a corporate “enterprise” cannot be held vicariously liable for the § 1962(c) violations of its employees, either for aiding and abetting, or under a theory of respondeat superior. We noted that a contrary holding would circumvent the holding in Enright by making the “victim” enterprise liable. We recognized that the enterprise may often benefit from the RICO violations, but noted that a plaintiff may recover only from the actual violators. Id. at n. 11.

In this case, plaintiffs sued Mobil and Mobil Chemical, rather than the individuals who may have committed the alleged fraud on behalf of these corporations. The § 1962(c) enterprise is alleged to be “[t]he association in fact of Mobil and Mobil Chemical, the advertising agencies engaged by them, including, without limitation, Wells, Rich, Greene, Inc., and other agencies which participated in the marketing of Hefty ‘Degradable’ trash and garbage bags and Kordite and Marketote ‘degradable’ bags.” Complaint at 10-11. Under 18 U.S.C. § 1961(4), an enterprise may consist of a “group of individuals associated in fact although not a legal entity.” However, this definition does not affect the separate inquiry into whether the alleged enterprise is distinct from the defendant. Plaintiffs [301]*301assert that since the “association-in-fact” enterprise is facially distinct from the defendants, the Enright rule is inapplicable.

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Bluebook (online)
943 F.2d 297, 1991 WL 160487, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brittingham-v-mobil-corp-ca3-1991.