Fifth Circuit Correctly Affirms Dismissal of Civil RICO, but Dramatically Misstates Boyle v. United States Enterprise Requirements

Walker v. Beaumont Independent School District, __F.3d ___, 2019 WL 4458378 (5th Cir. 2019)

The court affirmed the judgment finding that there insufficient facts to render plausible Walker’s attempted characterization of various unrelated Appellees as an “ongoing organization, formal or informal, that functions as a continuing unit.”*8.

The enterprise was alleged to involve approximately 35 residents and organizations in the Beaumont area, including the Beaumont Independent School District (“BISD”), the BISD Board of Trustees and subsequent BISD Board of Managers, two local newspapers and their employees, two online journalists, the local chapter of the International Brotherhood of Electrical Workers (“IBEW”) and several of its members, a Beaumont City Councilperson, two local attorneys, the United States Attorney for the Eastern District of Texas, two Assistant United States Attorneys, and two agents with the Federal Bureau of Investigation (“FBI”). The objective of this alleged conspiracy was to ruin Appellants’ reputations and businesses as part of a larger campaign to harm minority individuals who “stepped out of line” and “defied the status quo.”

Although the Court’s conclusion based on these facts is undoubtedly correct, the Court misstated the law as rendered by the Supreme Court in Boyle v. U.S. 556 U.S. 938 (2009), including citing to pre-Boyle law which was found to an incorrect interpretation of the enterprise requirement by Boyle. (see *7 citing to United States v. Bledsoe, 674 F.2d 647, 663 (8th Cir. 1982). In relying on this rejected law, the Circuit Court mistakenly stated that –
an association in fact enterprise was not required to have to be a formal or legal entity, but it must have some sort of hierarchical or consensual decision-making structure, and it must exist for purposes other than just to commit predicate acts.
*7, citing to Bledsoe above, emphasis added.

This italicized statement of the law was rejected in Boyle. In that case, the Court upheld a lower court instruction that stated “an association in fact enterprise is oftentimes more readily proven by what it does, rather than an abstract analysis of its structure.” Boyle, 556 U.S. at 942.  The Boyle court also stated that the evidence used to prove the pattern and the evidence establishing an enterprise “may in particular cases coalesce.” Id. at 947.

Thus, it not necessary for a plaintiff to allege that the association in fact enterprise “must exist for purposes other than just to commit predicate acts.” As the Court stated in Boyle, “an association in fact enterprise is simply a continuing unit that functions with a common purpose.” Id., at 948. The Circuit Court’s mistaken interpretation will come back to harm plaintiffs who meet this criterion, but are subject to an outdated, restrictive, and mistaken interpretation of the law.
David J. Stander is an attorney who focuses on civil RICO consulting and litigation.

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