M.D.N.C. Chronicles Circuit Split Re Extent to which a RICO Complaint Must Allege Turkette “Enterprise” Factors

Per AARP v. American Family Prepaid Legal Corp., Inc., 2009 WL 485154 (M.D.N.C. Feb. 25, 2009):

Neither party has cited, nor has the court found, any precedent in the Fourth Circuit as to the extent to which a RICO complaint must allege the requisites of an “enterprise” as set forth in Turkette. Tillett was decided on a full record after conviction and therefore does not speak directly to the issue. 763 F.2d at 630-61. The circuits are split in their approach. See, e.g., City of New York v. Smokes-Spirts.com, Inc., 541 F.3d 425, 451 (2d Cir.2008) (affirming dismissal of civil RICO claim for failure to allege facts supporting Turkette factors); Odom v. Microsoft Corp., 486 F.3d 541 (9th Cir.2007) (holding enterprise does not require separate structure and finding sufficient under Turkette a complaint alleging enterprise had common purpose, ongoing organization, and continuing unit); Asa-Brandt, Inc. v. ADM Investors Servs., Inc., 344 F.3d 738, 752 (8th Cir.2003) (noting requirement of separate enterprise structure but affirming grant of summary judgment for lack of proof); Pavlov v. Bank of New York Co. ., 25 F. App'x 70, 71 (2d Cir.2002) (holding complaint sufficiently alleged enterprise without pleading centralized hierarchy formed for the sole purpose of carrying out a pattern of racketeering acts); United States v. Patrick, 248 F.3d 11, 19 (1st Cir.2001) (refusing to require structure requirement in jury instructions); Begala v. PNC Bank, Ohio, Nat'l Ass'n, 214 F.3d 776, 781-82 (6th Cir.2000) (dismissing complaint for failing to allege Turkette factors); Richmond, 52 F.3d at 645 (same); Montesano v. Seafirst Commercial Corp., 818 F.2d 423, 427 (5th Cir.1987) (same); Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 790-91 (3d Cir.1984) (holding Turkette factors are burden of proof, not pleading); see also 1-7 CIVIL RICO P 7. 02, at 21 (Matthew Bender & Co., Inc.2008) (noting that ‘[t]he importance of the proper pleading of RICO's enterprise element cannot be overemphasized”). The court must therefore make a determination on a statute that our circuit has already characterized as “tormented,” Combs v. Bakker, 886 F.2d 673, 677 (4th Cir.1989), and whose interpretation remains in flux at the moment.


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