116 Cong. Rec. 36296 (1970) S. 2187, 89th Cong., 1st Sess. (1965). 10, 14 15 12, 21 12, 15, 16, 21 9 9 11 S. 30, 91st Cong., 1st Sess. (1969) .10, 11, 13 10 11, 12, 13 Black's Law Dictionary (5th ed. 1979) Bradley, Racketeers, Congress and the Courts: An གྲྭ 7 14 9 17 vi TABLE OF AUTHORITIES-Continued Page 19 10 Department of Justice Manual, tit. 9, ch. 110, .13, 14, 21 Report of the Ad Hoc Civil RICO Task Force of Reports of the Proceedings of the Judicial Confer- Webster's New World Dictionary (Second College ed. 1980). Webster's Third New International Dictionary (unabridged 1971) 7 9 passim 2 7 7 BRIEF OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AS AMICUS CURIAE IN SUPPORT OF RESPOND INTEREST OF THE AMICUS CURIAE The American Institute of Certified Public Accou is a national association whose membership is lim certified public accountants. The Institute has al mately 260,000 members, many of whom are re engaged as outside accountants to conduct indep audits of the financial statements of business enter The Institute has a special interest in addressi proper construction of the phrase "pattern of rac ing activity" as used in the RICO statute. Misin tations of the "pattern" element that some court adopted permit plaintiffs to misuse RICO's trebl 2 ages remedy and "racketeer" label and thus foster a severe "danger of vexatiousness different in degree and in kind from that which accompanies litigation in general." Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 739 (1975). When independent auditors express opinions on a client's financial statements, they become exposed to RICO actions brought by investors, creditors and others who may claim to have relied upon those statements in making investment decisions that ultimately prove unsatisfactory or in entering into business transactions with the auditor's clients that do not meet expectations. Although claimants often allege that outside professionals were implicated in a "scheme to defraud," accountants become subject to treble damages and the appellation "racketeer" for activity that Congress (and the public) never remotely considered to be indicative of organized, habitual criminality. In its Sedima decision three years ago, this Court stated that some defects that permit RICO's overly broad application to ordinary civil litigation are "inherent in the statute as written" and that their "correction must lie with Congress." Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 499 (1985).1 This Court also observed in Sedima, though, that it is appropriate for the courts to confine the reach of the statute by giving the "pattern" element a more "meaningful" focus. Id. at 496 n.14, 500. Members of the Institute, therefore, along with other professionals and legitimate businessmen and women, have a vital interest in urging this Court to adopt the Institute's proposed "pattern" standard. 1 Congress has not acted during the three years since this Court decided Sedima. In that time, the use of civil RICO to transform ordinary civil litigation into treble damage federal suits has accelerated to the point that the Judicial Conference of the United States twice has called upon Congress to narrow the reach of civil RICO substantially. See Reports of the Proceedings of the Judicial Conference of the United States at pp. 19, 75-76 (1987). These resolutions belie the attempts by the plaintiffs' bar to downplay the SUMMARY OF ARGUMENT I. While Congress did not specifically define the "pattern" element of RICO, the factors that this Court itself identified in Russello v. United States, 464 U.S. 16 (1983), for interpreting undefined terminology in RICO -the plain meaning of the term, the legislative intent as reflected in the legislative history, and the impact of the rule of lenity-all support the conclusion that the "pattern" element requires allegations and proof that the criminal activity was indicative of habitual criminal conduct. The plain and ordinary meaning of "pattern" is that the sample is "typical" or "characteristic." RICO's legislative history, moreover, demonstrates that the "pattern" requirement was a critical part of Congress' effort to focus the statute on the kind of habitual criminal activity that Congress felt it could not reach constitutionally by outlawing membership in organized criminal associations. The proper application of the rule of lenity also supports this construction of "pattern." II. As this Court also indicated in Russello, the meaning of a term can depend on the context and structure of the statute in which it is used. In this instance, the application of the "pattern" standard properly varies depending on the RICO subsection at issue. In each instance, there must be allegations and proof of the necessary "relationship" between the alleged "racketeering acts" and the prohibited effect on an enterprise that RICO seeks to protect from being improperly influenced or corrupted. In addition, there must be sufficient evidence of "continuity" to demonstrate the racketeering acts are "typical" or "characteristic." There must be something more than a single criminal episode or transaction, and there also must be allegations and proof that the continuing criminal activity represents a substantial seriousness of the threat RICO poses if not interpreted properly. See, e.g., Brief of Amicus Curiae Trial Lawyers for Public Justice In Support of Petitioners [“TLPJ Brief”] at 25-26 & n.48. |