Court Accepts Amended Civil RICO Complaint Finding No “Futility”

Trier et al v. Genesee County et al., 2017 WL 3278360, E.D. Mich., Aug. 2, 2017

Plaintiffs sought leave to file a second amended complaint to, among other things, clarify the RICO allegations. Defendants opposed arguing that the Proposed Second Amended Complaint should be denied due to futility of amendment and result in unfair prejudice.

The court found no futility finding that Plaintiffs’ RICO claims and all proposed amendments survive a motion to dismiss. The court addressed each element of § 1962(c) to find that the factual allegations, taken as true, provided sufficient facts for the court to draw the reasonable inference that Defendants were liable for the alleged violation of § 1962(c).

a. Enterprise

The Plaintiffs alleged that Defendants formed an association in fact enterprise that had a common purpose of engaging in the alleged misconduct of exchanging deputization for money. Plaintiffs further allege that “there were relationships among those associated with the enterprise” and “there was longevity as the relationships between the members of the Enterprise began in 2006 at the latest and continued up until at least year 2016.” Therefore, Plaintiffs’ Second Amended Complaint alleged sufficient factual allegations to support the enterprise element.

b. Conduct

The court accepted Plaintiffs claim that Defendants participated in the “operation or management” of the Enterprise’s affairs. Pickell was the central figure in the association in fact who demanded payment of monies from Plaintiffs in order to have deputization duties. Hope acted as Pickell’s appointed agent and representative, and endorsed the checks and deposited them into a bank account for the personal financial gain/benefit of Defendants. In exchange for Defendant Hope’s patronage and illegal activities, Defendant Pickell rewarded Defendant Hope by awarding his company Allen & Hope Inc. the exclusive rights to all process serving activities for Defendant, Genesee County and termination Plaintiffs. Defendant, C. Hope working with co-Defendants planned and devised the method to extort Plaintiffs and assisted and managed the affairs of the enterprise with Co-Defendants by determining and implementing schemes to increase revenues for Allen and Hope. These acts were condoned by Genesee County which had the custom, practice, and policy to take money not due the County by virtue of Defendant Pickell’s influence and political office.

Thus, the court found the Second Amended Complaint sufficiently described how the proposed defendant C. Hope and others engaged in misconduct violating § 1962(c). The court finds that the factual context created by these specific allegations together with the general factual allegations constitutes sufficient support for the conduct element.

c. Pattern of Racketeering Activity

The court found the SAC adequately alleged acts of extortion in violation of federal law, as Defendant Pickell, as aided and abetted by Hope, C. Hope and Allen & Hope, obtained property from Plaintiffs, i.e., payments of for [sic] $65.00 to $150.00 a year, with their consent, wrongfully induced under fear of economic harm, all in violation of 18 U.S.C. § 1951, as Plaintiffs were told that if they did not make the payments, which were unlawful and not required under law, they would not be selected to provide paid deputization duties.

In regards to the pattern of racketeering, Plaintiffs alleged that Defendants engaged in exchanging deputization for money from December 2006 until December 2016. Plaintiffs allege both the “continuity” and “relatedness” prongs of the pattern of racketeering activity element. As to relatedness, the acts of extortion were related to the affairs of the Enterprise as the Defendants worked together so that Defendant Pickell could obtain something of value, i.e., the annual payments from Plaintiffs, to which he had no official right, and in return Defendant Pickell would reward deputization designations to the Plaintiffs. Defendants Hope, C. Hope, and Hope’s company Allen & Hope aided and abetted Defendant Pickell in return for obtaining exclusive rights to process-serving activities in Genesee County.
Plaintiffs satisfied the “relatedness” prong because they essentially alleged that Defendants engaged in “criminal acts that have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.”

In regards to continuity, Plaintiffs adequately alleged close-ended continuity as these were continuous acts occurring over a substantial period of time, i.e., at least eleven (11) years. Plaintiffs also adequately alleged that the pattern of racketeering activity constituted “open-ended” continuity based upon a threat of continuing racketeering activity because the predicate activity constituted the regular way Defendants did business. Because such criminal conduct was part of the regular way Pickell, Hope, and C. Hope did business it gives rise to the inference that such offenses will continue indefinitely if not interrupted. Hope and C. Hope continue to maintain the exclusive right to process serving in the County and continue their close relationships with County officials, including Defendant Pickell.

Furthermore, Plaintiffs allege that the continuous acts will continue indefinitely because Defendants “continue to maintain the exclusive right to process serving in the County and continue their close relationships with County officials, including Defendant Pickell.

Thus, the court ruled that Plaintiffs have pled sufficient facts in support of their civil RICO claim to survive a motion to dismiss. Accordingly, amendment would not be “futile.”

The court also found the amendment would not unduly prejudice the defendants. Undue prejudice is often found when the delay in amending the pleadings is unexplained, unjustified, and the case has already reached an advanced stage of litigation, which is not the case here. The court stated that no undue prejudice exists from amended pleadings simply because the opposing party would have to defend against new or better pleaded claims.

Ed Note: This ruling effectively forecloses any motion to dismiss by Defendants.  This is an important case which shows that public corruption is clearly within the realm of civil RICO actions.

 

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