District Court Denies Summary Judgment of Complaint with RICO Claims finding Sufficient Genuine Dispute of Facts Regarding Section 1962(b), a Rarely Successful Allegation

Laurel Gardens LLC v. Timothy McKenna et al., 2020 WL 1875609 (E.D. Pa., April 15, 2020)

After remand, the court denied summary judgment finding there was a genuine dispute of material fact as to each count of the Complaint, including the RICO count.

Plaintiffs alleged that, despite warnings to the contrary, the Julicher Defendants conducted business with a Timothy McKenna, a Plaintiff employee, in furtherance of his goals to harm Plaintiffs.  Plaintiffs further allege that, through a pattern of threats of physical violence and financial ruin, as well as misuse of Plaintiffs’ proprietary information, the Julicher Defendants coordinated with Timothy McKenna, and his son Michael McKenna, to cause Plaintiffs to go out of business.

The Julicher Defendants asserted that “Plaintiffs have patently failed to establish any facts supporting…” their RICO claims, calling them “frivolous, baseless, and made without cogent facts…” but the court found the Plaintiffs adequately alleged that Julicher Defendants engaged in various violations including threats against Plaintiff to compel an unfavorable agreement and threatened Plaintiff with financial ruin with the aim of acquiring Plaintiffs’ clients.

The court addressed the section 1962(b) claim and found that it was adequately alleged that the Julicher Defendants, through a pattern of financial assistance to McKenna, physical and financial threats to Plaintiffs, and misusing Plaintiffs’ proprietary information, may have exercised a degree of “operation of management” over the alleged RICO enterprises, which were two Plaintiff sponsored legal entities.  In addition to this pattern of threats (presumably racketeering activity including extortion), Plaintiffs adequately alleged a misuse of proprietary information and company property, and collaboration among Timothy McKenna, Michael McKenna, and the Julicher Defendants to ‘acquire an interest’ in the alleged RICO enterprises, in violation of section 1962(b).

The court also found that the RICO defendants were clearly “distinct” from the legal entity enterprises.

Accordingly, there was sufficient evidence that there was genuine dispute of material fact to deny the motions for summary judgment.

Ed Note:    Section 1962(b) is a subsection of section 1962 and a violation which is rarely successfully alleged.

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