Fifth Circuit Affirms Previous Rulings that “Whistle Blowers” Do Not Have Standing to Bring Civil RICO Lawsuits

Arroyo v. Oprona, Inc., 2018 WL 2026996 (5th Cir. 2018)

The court affirmed a district court’s grant of a Rule 12(b)(6) motion to dismiss a civil RICO claim de novo, finding that the plaintiff did not establish standing to bring a civil RICO claim” under the RICO statute.

The court found that Arroyo has no standing under the RICO statute to assert her civil RICO claims because the injury Arroyo allegedly suffered stems from her loss of employment after she refused to participate in the scheme headed by Yoxall to defraud the IRS and reported Yoxall’s conduct to Rosen Swiss. “

The court cited to earlier precedent that “whistle blowers do not have standing to sue under RICO for the injury caused by the loss of their job.” “[B]eing discharged for either reporting a RICO violation or refusing to participate in a RICO violation does not flow from the predicate acts” and fails to establish standing to sue under the RICO statute. In other words, Arroyo’s injury resulted from Oprona’s decision to terminate her employment and not from the alleged predicate acts. Thus, Arroyo, as an employee allegedly discharged for reporting and refusing to participate in an activity that violated RICO, lacks standing to sue under the RICO statute.

Ed Note: This holding is consistent with thrust of civil RICO law that injury proximately and directly caused by predicate acts is required for standing. An employer’s act of termination of employment itself is not itself predicate activity.

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