A car repair shop owner sued a dealership, its attorney, and law firm, asserting claims for violation of RICO and § 1981. The auto repair expert claimed that dealership allegedly threatened to prevent him from testifying as an expert witness for his customers in their action against the dealership. The dealership retaliated by refusing to sell him Mercedes–Benz parts after his deposition. The U.S. District Court granted summary judgment for the Defendant, and Plaintiff appealed.
In 2012, Plaintiff’s customer and attorney in this action brought Plaintiff a 2006 Mercedes–Benz (“Mercedes”) for inspection. Plaintiff was not aware that at the same time, the car was the subject of a lawsuit against Defendant that had been compelled to arbitration. The plaintiffs in that suit (“customers”), also represented by Plaintiff’s attorney, alleged that the Mercedes that Defendant sold them was defective, and asserted claims against the dealership. Plaintiff inspected the car and found many mechanical problems. Plaintiff’s attorney then asked Plaintiff if he would testify as an expert witness in the customers’ lawsuit, and he agreed. Plaintiff’s deposition was scheduled but alleged that the day before, he received a call from Defendant’s employee advising him not to give the deposition and warning him that he would regret it. Plaintiff, however, appeared for the deposition and testified about his inspection of the vehicle. The day after his deposition, Plaintiff received another call from that employee, who told Plaintiff that Defendant would no longer sell him parts.
During the week of the arbitration hearing, Defendant’s counsel mailed Plaintiff a letter on behalf of Defendant formally severing the business relationship with Plaintiff because of his deposition testimony. Plaintiff did not testify at the arbitration, but his deposition testimony was read to the arbitrator. Plaintiff’s attorney sent the arbitrator a letter about the intimidating calls, and Plaintiff filed this lawsuit. The district court granted summary judgment to defendants on all claims, and Plaintiff appealed the decision as to his allegations under RICO and 42 U.S.C. §§ 1981 and 1982.
Plaintiff first argued that the district court erred in granting summary judgment to defendants on his civil RICO claim. To succeed on his claim, Plaintiff was required to provide evidence as to the existence of “1) a person who engages in 2) a pattern of racketeering activity, 3) connected to the acquisition, establishment, conduct, or control of an enterprise.”
Circuit Judge Edith Brown Clement of the Fifth Circuit Court of Appeals, explained in her opinion that “racketeering activity” means any of the predicate acts specified in § 1961(1). Plaintiff alleged that Defendants obstructed justice in violation of 18 U.S.C. § 1503 by attempting to intimidate him to prevent him from giving deposition testimony and testifying at the arbitration hearing. That statute makes it a criminal offense to “corruptly or by threats or force, or by any threatening letter or communication…. endeavor[ ] to influence, obstruct, or impede, the due administration of justice.” Plaintiff identified three purported criminal actions by defendants: (1) the phone call from Defendant warning him not to testify; (2) the phone call from Defendant informing Plaintiff that it would no longer sell him auto parts; and (3) the letter from the attorney ending Defendant’s business relationship with Plaintiff because of his deposition testimony.
Plaintiff’s claim failed, the Fifth Circuit said, because he couldn’t show the “pattern of racketeering activity” required to prosecute a civil RICO claim which “consists of two or more predicate criminal acts that are (1) related and (2) amount to or pose a threat of continued criminal activity.”
Judge Clement held that at best, Plaintiff identified only a single predicate act under § 1503, which was the phone call. Defendant’s termination of dealings with Plaintiff could not be construed as threats to prevent his testimony in the arbitration hearing because there was no threat of further penalty—the dealership unequivocally terminated its business with Plaintiff because of his deposition testimony. It didn’t make future dealings contingent on his absence at the hearing (or indicate that it would reconsider its decision if Plaintiff didn’t testify).
The judge held that even assuming that the two phone calls and the letter constitute three predicate acts under § 1503, Plaintiff still failed to satisfy the continuity requirement. Predicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy this requirement. The alleged witness intimidation and retaliation were committed within one week and were directed towards, at most, two discrete events. The alleged predicate acts here were perpetrated in the context of Defendant’s lawsuit—not part of defendants’ regular way of doing business. Thus, it did not create a threat of long-term racketeering activity. Plaintiff claimed that Defendant refused to sell him parts after he served as an expert witness against the dealership in arbitration—any argument that Defendant’s business decision threatened long-term criminal activity was frivolous, the Court held.
Finally, the judge explained that, even if Plaintiff had produced evidence of a pattern of racketeering activity, he didn’t demonstrate the existence of an enterprise. Construe generously, Plaintiff’s complaint alleges an enterprise created by the alleged racketeering activity itself. This obviously is not sufficient to plead the existence of an enterprise “separate and apart from the pattern of racketeering activity in which it engages.” As a result, Judge Clement held that the district court properly granted summary judgment on Plaintiff’s breach of contract claim “dressed in civil RICO garb.”
The Circuit Court vacated the district court’s grant of summary judgment on the § 1981 claim and remanded the case, but it affirmed the district court’s grant of summary judgment on the civil RICO claim and his § 1982 claim.
Zastrow v. Houston Auto Imports Greenway Ltd., 789 F.3d 553 (C.A.5 (Tex.) June 12, 2015).