Morrison v. Syntex Laboratories, Inc.

101 F.R.D. 743, 17 Fed. R. Serv. 587, 1984 U.S. Dist. LEXIS 16865
CourtDistrict Court, District of Columbia
DecidedMay 8, 1984
DocketCiv. A. No. 82-2100
StatusPublished
Cited by12 cases

This text of 101 F.R.D. 743 (Morrison v. Syntex Laboratories, Inc.) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Morrison v. Syntex Laboratories, Inc., 101 F.R.D. 743, 17 Fed. R. Serv. 587, 1984 U.S. Dist. LEXIS 16865 (D.D.C. 1984).

Opinion

MEMORANDUM OPINION AND ORDER

ARTHUR L. BURNETT, United States Magistrate.

Plaintiffs seek to amend the complaint in this case to assert a RICO cause of action under 18 U.S.C. § 1964(c) by motion filed [744]*744March 27, 1984. Plaintiffs initially filed a complaint in this products liability case alleging negligence, breach of warranty and strict liability on July 27, 1982. Now they assert that as a result of recent depositions in February and March, 1984 they have become aware of certain facts which show that certain officials and employees of the defendant engaged in and implemented a scheme of fraudulent advertising of the infant formula, Neo-Mull-Soy, the product at issue in this case, through the use of the U.S. Mails. These facts, they claim, support an additional cause of action under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961— 1968. Defendant strongly opposes the amendment of the complaint asserting that the amendment could have been offered much earlier in the case and thus is now untimely, would require additional discovery and delay the trial now scheduled for August 13, 1984, and is unwarranted, as such proposed cause of action on the facts of this case would fail to state a claim upon which relief can be granted.

The Magistrate heard extensive oral argument from counsel on May 3, 1984, has carefully reviewed each of the several memoranda filed, and has reviewed the court file in this case. The Magistrate has fully considered the intent and scope of the civil provision of the RICO statute, 18 U.S.C. § 1964(c), and whether it would be an exercise in “futility” to allow the amendment, only for the Court to be faced with a motion to dismiss which should be granted.

The Magistrate concludes that the motion to amend should be denied for two separate and distinct reasons. First, this case has now been pending for almost two years and it appears entirely plausible that upon the receipt of answers to interrogatories and requests for production of documents and records, the plaintiffs had sufficient information to have sought this amendment at least a year ago. Thus, it fully appears that plaintiffs had knowledge of sufficient facts underlying their allegations in the proposed RICO cause of action long ago and delayed unnecessarily in raising them. The plaintiffs could have reasonably surmised, even as early as the time they filed their complaint, that Syntex made some use of the mails to advertise a nationally distributed product, Neo-MullSoy, and they certainly should have known this fact after receipt of the initial wave of discovery in this case. Coming this late in the case, the motion to amend thus should be rejected. Cf. Darms v. McCulloch Oil Corp., 720 F.2d 490, 494 (8th Cir.1983); Johnsen v. Rogers, 551 F.Supp. 281 (C.D.Calif.1982).

Trial is now set for August 13, 1984, just over three months away, and it can fairly be anticipated that adding this cause of action now would justly warrant further additional discovery by the defendant to meet this cause of action, thus warranting continuing the trial to a much later date. No responsible counsel facing a potential of treble damages for his client would proceed to trial within a period of little over three months without extensive additional discovery to be prepared to counter the evidence anticipated to be offered by the plaintiff.

Second, the RICO civil cause of action under 18 U.S.C. § 1964(c) permits the treble damage remedy to a person injured “in his business or property by reason of a violation of section 1962.” The limitation of injury to being injured in one’s business or property cautions extending this provision to personal injury arising out of a tort in a products liability case. Had Congress intended to create a federal treble damage remedy for cases involving bodily injury, injury to reputation, mental or emotional anguish, or the like, all of which will cause some financial loss, it could have enacted a statute referring to injury generally, without any restrictive language. If RICO applied in this case, it would most likely apply in every products liability case involving alleged false representations, and use of the mails or the channels of interstate commerce.

Indeed, there is a further question of whether a misrepresentation adequate to [745]*745establish liability for common law fraud is sufficient to establish the requisite degree of guilty knowledge and fraudulent intent required in a mail fraud case as a predicate for civil liability under § 1964(c), but we need not resolve that issue in acting on this motion to amend the complaint. Of interest in this connection is Guerrero v. Kai-zen, 571 F.Supp. 714 (D.D.C.1983), in which the court clearly indicated that a plaintiffs claim that he was injured by reason of fraud in which the mails happened to be used, by itself, does not suffice to allege that an injury occurred “by reason of” a RICO violation.

This Magistrate agrees with the court in In Re Action Industries Tender Offer, 572 F.Supp. 846, 850 (E.D.Va.1983), that Congress did not intend for RICO to be used by private plaintiffs to claim treble damages for ordinary and routine tort causes of action. The court there observed that the legislative history and language of RICO indicate a similarity between RICO and the federal antitrust laws, see Nathan, Civil RICO, 30 Prac.Law 57, 68 (1984), and noted that a number of courts have carried the antitrust line of reasoning further and have determined that Section 1964’s requirement of an injury to business or property refers to a “commercial” injury in the RICO context. 572 F.Supp. at 851. While the emphasis in many cases has been on commercial or business injury, one may argue that the statute uses the disjunctive in referring to “business or property.” The Court in Van Schaick v. Church of Scientology, Inc., et al., 535 F.Supp. 1125 (D.Mass.1982), responded to this observation thusly:

“Yet we believe that phrase must be read with the statute’s primary purpose — to protect legitimate businesses from infiltration by racketeers — in mind. Thus, in construing ‘property’ courts should be sensitive to the statute’s commercial orientation and to Congress’ obvious intention to restrict the plaintiff class. We do not believe Congress intended § 1964(c) to afford a remedy to every consumer who could trace purchase of a product to a violation of § 1962.” 535 F.Supp. at 1137.

The Court there concluded:

“Absent a clear statement that Congress intended such a result, we believe courts should confine § 1964(c) to business loss from racketeering injuries.” 535 F.Supp. at 1137.

Subsequent to the argument, counsel for the plaintiff brought to the Magistrate’s attention the unpublished Order by Judge Robert P. Aguilar of the Northern District of California in Joseph Sinai v. ARCO Medical Products Company, et al., C.A. No. C-82-4593RPA, filed September 13, 1983. The Magistrate has carefully reviewed and fully considered the views expressed by the court in Sinai,

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Bluebook (online)
101 F.R.D. 743, 17 Fed. R. Serv. 587, 1984 U.S. Dist. LEXIS 16865, Counsel Stack Legal Research, https://law.counselstack.com/opinion/morrison-v-syntex-laboratories-inc-dcd-1984.