Corley v. Rosewood Care Ctr., Inc. - 142 F.3d 1041 (7th Cir. 1998)

Rule:

With civil RICO, the viability of plaintiff's claims turns on whether he has established a pattern of racketeering activity. A pattern requires at least two acts of racketeering activity within a ten-year period. 18 U.S.C.S. § 1961(5). And "racketeering activity" is defined to include, among other things, any act indictable under specified provisions of the United States Code, including 18 U.S.C.S. § 1341 (mail fraud) and 18 U.S.C.S. § 1343 (wire fraud). Although two predicate acts of racketeering are necessary to form a pattern, two acts alone generally will not suffice. In addition to at least two predicate acts, a RICO plaintiff must show that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity. A RICO plaintiff must show continuity plus relationship with respect to the alleged predicates.

Facts:

Plaintiffs Robert Corley and his mother Vera alleged that defendant Rosewood Care Center, Inc. of Peoria violated the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.S. §§ 1961-1968, by engaging in a scheme to defraud the residents of nursing homes. Plaintiffs alleged that defendant engaged in a "bait and switch" scheme, making promises to induce plaintiffs to purchase nursing home services that were not delivered as promised. The district court initially sustained plaintiffs' complaint, finding that it sufficiently alleged a pattern of racketeering activity under the RICO statute. The district court later granted summary judgment in favor of defendant because plaintiffs had failed to come forward with sufficient evidence to establish a RICO pattern. Plaintiffs appealed.

Issue:

Did the plaintiffs fail to establish a pattern of racketeering activity, thereby warranting the grant of summary judgment in favor of the defendant?

Answer:

No.

Conclusion:

The Court reversed the district court order that granted summary judgment to defendant nursing home in an action pursuant to RICO and remanded that claim for further proceedings because plaintiff purchasers had sufficiently stated a claim of racketeering activity. According to the Court, the predicate acts of racketeering alleged by the plaintiffs satisfied the relationship test since the same or similar purposes, results, participants, victims, or methods of commission, or otherwise were interrelated by distinguishing characteristics and were not isolated events. The Court noted that in this case, the defendants nor the district court have suggested that the core predicate acts comprising the alleged "bait and switch" scheme were insufficiently related to satisfy the relationship prong.