Civil RICO Lawsuits, Enterprises, And Sole Proprietorships: What You Need To Know
In order to bring a successful civil RICO claim under federal law or Florida state law, a plaintiff must prove that the defendant(s) acted as part of an “enterprise.” An enterprise is a commercial association with a “fundamental structure” that has the following three characteristics:
- A genuine relationship between all parties named;
- An association with a common purpose; and
- A reasonable amount of operational longevity.
This raises an important question: Can you prove that the owner and operator of a sole proprietor acted as part of a RICO enterprise? In this blog post, our West Palm Beach RICO claims attorney answers the question by highlighting the key things to know about sole proprietorship enterprises and RICO claims.
Case Law: Cedric Kushner Promotions, Ltd. v. King
As noted above, a plaintiff in a civil RICO lawsuit may assert and establish that the defendant(s) acted as part of an enterprise. If two wholly separate corporations conspire together to engage in racketeering activity, it is clear that an enterprise can exist. However, there have long been questions about the extent to which a corporation is part of an enterprise if it only conspires with itself and its own agents, principals, and subsidiaries. The Supreme Court of the United States addressed this issue directly in the 2001 case of Cedric Kushner Promotions, Ltd. v. King. Here is a brief overview of the facts of the case:
- Cedric Kushner Promotions was a corporate boxing promoter. The company filed a civil RICO lawsuit against famed boxing promoter Don King, who was the president and sole owner of a competing company. Cedric Kushner Promotions alleged that Mr. King—both personally and professionally—engaged in unlawful racketeering activity.
Supreme Court Reverses Lower Court, Allows RICO Claim to Proceed Against Sole Proprietor
Initially, the RICO claim against Don King was dismissed on the grounds that the “enterprise” element of the law was not satisfied. In effect, the federal court ruled that Don King, who was the sole proprietor and only employee of his company, could not form an enterprise with himself.
On review, the Supreme Court unanimously reversed the decision. Writing for the majority, Justice Stephen Breyer held that the need for two distinct entities to form an enterprise was satisfied in this case. Specifically, the nation’s highest court ruled that “the corporate owner/employee, a natural person, is distinct from the corporation itself, a legally different entity.” While civil RICO claims are always highly fact-specific legal cases, the court is clear: A sole proprietorship could be held liable in a RICO lawsuit.
Call Our Miami & West Palm Beach RICO Lawyers for Immediate Help
At Pike & Lustig, LLP, our Florida civil RICO law attorneys have the specialized knowledge and legal expertise to protect your legal rights. If you have any questions about sole proprietorships in a state or federal civil case, we are here to help. Call us today to arrange your confidential initial consultation. Our commercial litigation team provides representation in civil RICO cases throughout Southeastern Florida.
Resource:
law.cornell.edu/supct/html/00-549.ZS.html
