N.D. Georgia Adopts Majority Position Re: Standing under § 1962(a) of RICO

Per Fuller v. Home Depot Services, LLC, 2007 WL 328815 (N.D.Ga. Jan. 31, 2007):

Under section 1962(a) it is unlawful to invest income derived from a pattern of racketeering in an enterprise. Bill Buck Chevrolet, Inc. v. GTE Florida, Inc., 54 F.Supp.2d 1127, 1132 (M.D.Fla.1999). By claiming that Home Depot's scheme violated § 1962(a), the plaintiff must allege that he has been injured as a result of Home Depot investing income derived from operating its enterprise. See Pelletier v. Zweifel, 921 F.2d 1465, 1518 (11th Cir.1991). The plaintiff's claim is that Home Depot received income from a pattern of racketeering when it processed the "damage protection" fees via credit card transactions and then invested that income back into the operation of the "damage protection" scheme. However, the plaintiff does not claim any injury resulting from Home Depot's alleged investing of the racketeering income. His only alleged injury resulted from the underlying predicate act of mail and wire fraud, i.e., the harm to the plaintiff was his being charged money. At issue, therefore, is whether the plaintiff has sufficiently pled an injury under § 1962(a).

This issue apparently has not been addressed by the Eleventh Circuit. While the injury requirement under § 1962(c) may be satisfied by alleging injury caused by the racketeering activity itself, to require the same showing under § 1962(a) would render any difference between the two sections meaningless. The majority of courts that have addressed this issue have adopted a more restrictive rule that limits standing under § 1962(a) to only allegations of an injury that results from the investment of the racketeering proceeds, not an injury resulting from the underlying racketeering activity itself. [FN2] Lockheed Martin Corp. v. Boeing Co., 357 F.Supp.2d 1350, 1369-71 (M.D.Fla.2005). Similarly, this court adopts that majority rule and holds that merely alleging reinvestment of racketeering proceeds into the enterprise is insufficient to state a claim under § 1962(a).

FN2. For a complete discussion of the circuit split regarding the different injury requirements under § 1962(a-c), see Lockheed Martin, 357 F.Supp.2d at 1368-1371 ("If plaintiff's reinvestment injury concept were accepted, almost every pattern of racketeering activity by a corporation would be actionable under § 1962(a), and distinction between § 1962(a) and § 1962(c) would be meaningless.").


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