H. J. Inc. v. Northwestern Bell Telephone Co.

492 U.S. 229, 109 S. Ct. 2893, 106 L. Ed. 2d 195, 1989 U.S. LEXIS 3239, 57 U.S.L.W. 4951
CourtSupreme Court of the United States
DecidedJune 26, 1989
Docket87-1252
StatusPublished
Cited by2,738 cases

This text of 492 U.S. 229 (H. J. Inc. v. Northwestern Bell Telephone Co.) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
H. J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 109 S. Ct. 2893, 106 L. Ed. 2d 195, 1989 U.S. LEXIS 3239, 57 U.S.L.W. 4951 (1989).

Opinions

[232]*232Justice Brennan

delivered the opinion of the Court.

The Racketeer Influenced and Corrupt Organizations Act (RICO or Act), Pub. L. 91-452, Title IX, 84 Stat. 941, as amended, 18 U. S. C. §§ 1961-1968 (1982 ed. and Supp. V), imposes criminal and civil liability upon those who engage in certain “prohibited activities.” Each prohibited activity is defined in 18 U. S. C. § 1962 to include, as one necessary element, proof either of “a pattern of racketeering activity” or of “collection of an unlawful debt.” “Racketeering activity” is defined in RICO to mean “any act or threat involving” specified state-law crimes, any “act” indictable under various specified federal statutes, and certain federal “offenses,” 18 U. S. C. §1961(1) (1982 ed., Supp. V); but of the term “pattern” the statute says only that it “requires at least two acts of racketeering activity” within a 10-year period, 18 U. S. C. § 1961(5). We are called upon in this civil case to consider what conduct meets RICO’s pattern requirement.

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RICO renders criminally and civilly liable “any person” who uses or invests income derived “from a pattern of racketeering activity” to acquire an interest in or to operate an enterprise engaged in interstate commerce, § 1962(a); who acquires or maintains an interest in or control of such an enterprise “through a pattern of racketeering activity,” § 1962(b); who, being employed by or associated with such an enterprise, conducts or participates in the conduct of its af[233]*233fairs “through a pattern of racketeering activity,” § 1962(c); or, finally, who conspires to violate the first three subsections of § 1962, § 1962(d). RICO provides for drastic remedies: conviction for a violation of RICO carries severe criminal penalties and forfeiture of illegal proceeds, 18 U. S. C. §1963 (1982 ed., Supp. V); and a person found in a private civil action to have violated RICO is liable for treble damages, costs, and attorney’s fees, 18 U. S. C. § 1964(c).

Petitioners, customers of respondent Northwestern Bell Telephone Co., filed this putative class action in 1986 in the District Court for the District of Minnesota. Petitioners alleged violations of §§ 1962(a), (b), (c), and (d) by Northwestern Bell and the other respondents — some of the telephone company’s officers and employees, various members of the Minnesota Public Utilities Commission (MPUC), and other unnamed individuals and corporations — and sought an injunction and treble damages under RICO’s civil liability provisions, §§ 1964(a) and (c).

The MPUC is the state body responsible for determining the rates that Northwestern Bell may charge. Petitioners’ five-count complaint alleged that between 1980 and 1986 Northwestern Bell sought to influence members of the MPUC in the performance of their duties — and in fact caused them to approve rates for the company in excess of a fair and reasonable amount — by making cash payments to commissioners, negotiating with them regarding future employment, and paying for parties and meals, for tickets to sporting events and the like, and for airline tickets. Based upon these factual allegations, petitioners alleged in their first count a pendent state-law claim, asserting that Northwestern Bell violated the Minnesota bribery statute, Minn. Stat. § 609.42 (1988), as well as state common law prohibiting bribery. They also raised four separate claims under § 1962 of RICO. Count II alleged that, in violation of § 1962(a), Northwestern Bell derived income from a pattern of racketeering activity involving predicate acts of bribery and used [234]*234this income to engage in its business as an interstate “enterprise.” Count III claimed a violation of § 1962(b), in that, through this same pattern of racketeering activity, respondents acquired an interest in or control of the MPUC, which was also an interstate “enterprise.” In Count IV, petitioners asserted that respondents participated in the conduct and affairs of the MPUC through this pattern of racketeering activity, contrary to § 1962(c). Finally, Count V alleged that respondents conspired together to violate §§ 1962(a), (b), and (c), thereby contravening § 1962(d).

The District Court granted respondents’ Federal Rule of Civil Procedure 12(b)(6) motion, dismissing the complaint for failure to state a claim upon which relief could be granted. 648 F. Supp. 419 (Minn. 1986). The court found that “[e]ach of the fraudulent acts alleged by [petitioners] was committed in furtherance of a single scheme to influence MPUC commissioners to the detriment of Northwestern Bell’s ratepayers.” Id., at 425. It held that dismissal was therefore mandated by the Court of Appeals for the Eighth Circuit’s decision in Superior Oil Co. v. Fulmer, 785 F. 2d 252 (1986), which the District Court interpreted as adopting an “extremely restrictive” test for a pattern of racketeering activity that required proof of “multiple illegal schemes.” 648 F. Supp., at 425.1 The Court of Appeals for the Eighth Circuit affirmed the dismissal of petitioners’ complaint, confirming that under Eighth Circuit precedent “[a] single fraudulent effort or scheme is insufficient” to establish a pattern of racketeer[235]*235ing activity, 829 F. 2d 648, 650 (1987), and agreeing with the District Court that petitioners’ complaint alleged only a single scheme, ibid. Two members of the panel suggested in separate concurrences, however, that the Court of Appeals should reconsider its test for a RICO pattern. Id., at 650 (McMillian, J.); id., at 651 (J. Gibson, J.). Most Courts of Appeals have rejected the Eighth Circuit’s interpretation of RICO’s pattern concept to require an allegation and proof of multiple schemes,2 and we granted certiorari to resolve this conflict. 485 U. S. 958 (1988). We now reverse.

[236]*236II

In Sedima, S. P. R. L. v. Imrex Co., 473 U. S. 479 (1985), this Court rejected a restrictive interpretation of § 1964(c) that would have made it a condition for maintaining a civil RICO action both that the defendant had already been convicted of a predicate racketeering act or of a RICO violation, and that plaintiff show a special racketeering injury. In doing so, we acknowledged concern in some quarters over civil RICO’s use against “legitimate” businesses, as well as “mobsters and organized criminals” — a concern that had frankly led to the Court of Appeals’ interpretation of § 1964(c) in Sedima, see id., at 499-500.

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Bluebook (online)
492 U.S. 229, 109 S. Ct. 2893, 106 L. Ed. 2d 195, 1989 U.S. LEXIS 3239, 57 U.S.L.W. 4951, Counsel Stack Legal Research, https://law.counselstack.com/opinion/h-j-inc-v-northwestern-bell-telephone-co-scotus-1989.