Fabrico Manufacturing Corp. v. Wilson Sporting Goods Co.

660 F. Supp. 601, 1987 U.S. Dist. LEXIS 3413
CourtDistrict Court, N.D. Illinois
DecidedApril 27, 1987
Docket85 C 71
StatusPublished
Cited by4 cases

This text of 660 F. Supp. 601 (Fabrico Manufacturing Corp. v. Wilson Sporting Goods Co.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fabrico Manufacturing Corp. v. Wilson Sporting Goods Co., 660 F. Supp. 601, 1987 U.S. Dist. LEXIS 3413 (N.D. Ill. 1987).

Opinion

MEMORANDUM OPINION

PRENTICE H. MARSHALL, District Judge.

Before us is the motion of defendant Wilson Sporting Goods Company [Wilson] for summary judgment on all six counts of plaintiff Fabrico Manufacturing Corporation’s [Fabrico’s] complaint. The first five counts state claims for relief under state law. Count VI states a claim under the Racketeer Influenced and Corrupt Organizations Act [RICO], 18 U.S.C. § 1961 et seq.

Fabrico filed its complaint in the Circuit Court of Cook County, Illinois. The defendants removed it here pursuant to 28 U.S.C. § 1441. We have jurisdiction over the RICO claim under 28 U.S.C. §§ 1331 and 1337 and 18 U.S.C. § 1964. The state law claims are pendent to the RICO claim.

Most of the facts related to the RICO claim are not in dispute. Wilson manufactures footballs. One of the components of a football is the bladder, which retains the air inside the football. Before 1979 Wilson used bladders made exclusively from butyl rubber. In 1979 Wilson began experimenting with urethane bladders, which it hoped would leak less frequently than butyl rubber bladders do. At first Wilson purchased finished urethane bladders from other manufacturing companies; later Wilson itself began manufacturing urethane bladders.

Fabrico is one of the companies which manufactured urethane bladders for Wilson. Wilson first approached Fabrico in 1978 and asked Fabrico to assist Wilson to develop a new bladder. From 1978 to 1980, Fabrico helped Wilson redesign the bladder and search for suitable materials. According to Fabrico, it entered into this relationship with Wilson with the expectation that Fabrico would become Wilson’s requirement supplier once Wilson settled on a new design. In fact Wilson purchased bladders from another manufacturing company, not Fabrico, and Fabrico’s dealings with Wilson ended in early 1981.

Wilson and Fabrico resumed their association in mid-1982. Wilson was still not satisfied with the design of the bladders it was using. Robin Martin, a project engineer for Wilson, met with Fabrico’s president, Ashley Ross, and director of engineering, James McKee, and proposed that Fabrico again work for Wilson to improve the bladder. At this meeting Ross expressed his dissatisfaction over Fabrico not getting Wilson’s business in 1981. Ross told Martin that Fabrico would not do further developmental work for Wilson unless Fabrico was assured of becoming Wilson’s supplier of the improved urethane bladder. According, to Ross and McKee, Martin assured them that Fabrico would get Wilson’s business.

Fabrico again commenced work to develop a new bladder. According to Fabrico, it developed certain information which it viewed as confidential and which it shared with Wilson only under the understanding that Fabrico would eventually get the business of mass-producing bladders for Wilson. Fabrico alleges, and produces evidence to support its allegation, that Wilson incorporated into the design of the improved urethane bladder some of the information Fabrico developed.

Fabrico never became Wilson’s supplier. Fabrico did sell a limited number of bladders to Wilson for research purposes, but Wilson never ordered commercial quantities from Fabrico. Wilson itself now manufactures all the urethane bladders it uses in footballs.

*603 In its complaint, Fabrico alleges that Wilson intentionally made fraudulent misrepresentations to Fabrico in order to induce Fabrico to assist Wilson with its research and development. Fabrico contends that it relied on a knowingly false promise by Wilson that Wilson would order from Fabrico the bladders Wilson would eventually use in production. In the RICO count, Fabrico further alleges that Wilson conducted the fraudulent activity via interstate mail and wires. Interstate mail and wire fraud—that is, violations of 18 U.S.C. §§ 1341 and 1343—constitute “racketeering activity.” Id. § 1961(1). Fabrico alleges that Wilson’s acts of mail and wire fraud amount to a pattern of racketeering activity, see id. § 1961(5), which violates 18 U.S.C. § 1962.

Wilson contends in its motion for summary judgment that Fabrico has not presented evidence of a pattern of racketeering activity. It refers to Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 n. 14, 105 S.Ct. 3275, 3285 n. 14, 87 L.Ed.2d 346 (1985), in which the Supreme Court declared that predicate acts must exhibit “continuity plus relationship” to constitute a pattern of racketeering activity within the meaning of RICO. Predicate acts related to a single fraudulent transaction, Wilson continues, lack the requisite continuity.

Recent decisions of our court of appeals have explicated the meaning of “continuity plus relationship.” They highlight certain factors relevant to determining whether the standard is met: “[t]he number and variety of predicate acts and the length of time over which they were committed, the number of victims, the presence of separate schemes, and the occurrence of distinct injuries.” Elliott v. Chicago Motor Club Insurance, 809 F.2d 347, 350 (7th Cir.1987).

These decisions have focused primarily on the number of schemes and victims. In Elliott the plaintiffs alleged that the defendant insurers had committed several acts of mail fraud over several years in furtherance of a scheme to defraud plaintiffs. The court found continuity lacking because all the “acts of alleged mail fraud ... related to the [plaintiffs’] attempt to settle one claim under their uninsured motorist insurance policy.” Id. Moreover, although there were five plaintiffs who alleged they were victims, all of their claims arose “from the same automobile accident and the same insurance policy.” Id. In Marks v. Pannell Kerr Forster, 811 F.2d 1108 (7th Cir.1987), the court upheld the dismissal of plaintiffs RICO claim because he “did not allege defendants defrauded other victims with similar racketeering activity and did not allege he has been defrauded more than once by the defendants through similar racketeering acts.” Id. at 1111. In Lipin Enterprises, Inc. v. Lee, 803 F.2d 322

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Bluebook (online)
660 F. Supp. 601, 1987 U.S. Dist. LEXIS 3413, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fabrico-manufacturing-corp-v-wilson-sporting-goods-co-ilnd-1987.