RICO does not apply to a rate regulation case such as the one before us. Suffolk's claims are dismissed without costs or disbursements. The court recognizes the difficult emotional, economic, environmental and political issues surrounding Shoreham. It is not too late to settle these swirling controversies. There is no time better than now for resolution of the entire controversy. Even this case can go on almost indefinitely during protracted appeals which can only benefit the lawyers and put LILCO at further risk. Removal of uncertainty by the parties and officials is essential to the welfare of Long Island. Dated: So ordered. Brooklyn, New York Weint Jack B. Weinstein United States District Judge Mr. HUGHES. Mr. Califa, welcome. STATEMENT OF ANTONIO J. CALIFA, LEGISLATIVE COUNSEL, AMERICAN CIVIL LIBERTIES UNION, WASHINGTON OFFICE Mr. CALIFA. Thank you, Mr. Chairman. We appreciate the opportunity to testify today and we commend you for calling this series of comprehensive hearings, which we believe will result in a thorough examination of RICO and its place in American law. The ACLU is convinced of the necessity for civil RICO reform and we testify today in support of H.R. 1046. RICO has become a routine aspect of Federal civil litigation. The allure of treble damages and the broad definitions of enterprise and pattern of racketeering activity have led to a tremendous expansion of RICO. The Supreme Court case of Sedima has also helped this expansion. The Supreme Court decided to interpret RICO literally, thereby eliminating many of the restrictions lower courts had read into the statute. The Supreme Court acknowledged that "RICO is evolving into something quite different from the original conception of its enacters." Nevertheless, the Court held that the provision that had helped cause this expansion "is inherent in the statute as written and its correction must lie with Congress." There is a trend of experimenting with civil RICO in an increasingly broad range of situations far removed from those associated with organized crime. These situations range from domestic relations disputes to labor-management conflicts, and to ideological confrontations. It is this latter category-ideological confrontations-that especially concerns the ACLU today. In March of this year, the third circuit held that RICO applied to abortion clinic protesters in the case of Northeast Women's Center, Inc. v. McMonagle. After this case, RICO complaints can be brought against antiapartheid demonstrators, antinuclear demonstrators, and animal rights activists, among others. If they trespass and cause some damage, a court could find that they had been involved in extortion and robbery, and are thus subject to RICO. This subcommittee and the Congress must decide whether the kind of illegality involved in the abortion clinic case is what RICO should punish. Should political protesters be subject to treble damages under a Federal racketeering statute if the protesters damage property and trespass. We contend that this is an inappropriate use of RICO. The potential for chilling first amendment rights is enormous. Plaintiffs' lawyers can use RICO to strike out against an advocacy organization for ideological reasons. RICO would allow plaintiffs in their complaint to name advocacy organizations and other individuals as part of an enterprise that committed the criminal acts even if they are far removed from the commission of these predicate acts. So the defendants would be charged in their complaint with being racketeers and with being involved with a corrupt organization. They would be subject potentially for treble damages. Because it is difficult to get a complaint dismissed at this stage, plaintiffs could engage in extensive discovery as to associational ties. Even if defendants ultimately prevail and get the claim dismissed, defendants would have to pay their own legal costs. And, Mr. Chairman, even strong opponents of RICO reform, like Professor Goldsmith, state that very few RICO cases are subject to rule 11 sanctions. We strongly support provisions of H.R. 1046, which require that RICO claims be pled with particularity. This would help spare individuals who are not engaged in predicate activity the expense of litigation and the embarrassment of a RICO suit. If a claim is not pled with particularity, courts should dismiss it. Because it provides for pleading with particularity and the deletion of the term "racketeer," H.R. 1046 improves RICO. However, it is not the entire answer to the problems posed to civil liberties. by RICO. The ACLU believes that RICO should not apply to organizations and individuals who are at their core political and noneconomic entities. Other Federal laws and State remedies are adequate sanctions against them. The fundamental problems which we have discussed in our written statement concerning criminal RICO should be addressed. Basic definitions used in the statute need to be examined. The vagueness of RICO's terms make harsh penalties available at the whim of the prosecutor without the identification of genuine aggravating circumstances. Mr. Chairman, we commend the fairness of the process in which you and the subcommittee have been engaged in reviewing RICO law. We ask that you report H.R. 1046 favorably with appropriate amendments. Thank you. Mr. HUGHES. Thank you, Mr. Califa. [The prepared statement of Mr. Califa follows:] PREPARED STATEMENT OF ANTONIO J. CALIFa, Legislative Counsel, AmERICAN CIVIL LIBERTIES UNION, WASHINGTON OFFICE TESTIMONY BEFORE THE UNITED STATES HOUSE OF REPRESENTATIVES, SUMMARY OF STATEMENT OF Legislative Counsel, American Civil Liberties Union 1. The declared purpose of Congress in enacting RICO was to seek the eradication of organized crime in the United States. Due to the broad definition of "enterprise" and "pattern," however, civil RICO's current application is more likely to involve "garden variety" fraud cases against reputable businesses, and against political organizations, rather than against "mob" enterprises. 2. Civil RICO is especially threatening to First Amendment rights of free speech and association as innocent organizations and individuals can be brought into a RICO suit on the criminal acts of another due to the liberal pleading requirements and the loose definition of "enterprise" and "pattern of racketeering activity." 3. The available safeguards (i.e. Rule 11) are not good enough as they fail to protect those who could be named in a RICO suit solely because of associational ties. Although the claims against these defendants may be dismissed eventually, the damage to First Amendment rights has already been done. Due to the threat of treble damages, attorney fees, intrusive discovery and the "racketeer" label, the mere onset of litigation provides a serious affront to First Amendment privileges. This abuse has been manifested in the recent wave of abortion clinic cases. 4. After the decision in Northeast Women's Center, Inc. v. McMonagle, the potential for use of RICO against political advocacy organizations is even greater. In NEWC, abortion protestors were held liable under RICO. Other protestors, such as anti-nuclear protestors and anti-apartheid protestors, who trespass and cause damage, will now be liable under RICO. 5. H.R. 1046 addresses some of the deficiencies in existing RICO law. The stricter pleading requirements, narrowing of the availability of treble damages, changing the level of proof, and the elimination of the pejorative term "racketeer" will help curb some of the First Amendment abuses engendered in current RICO law, while preserving its ability to carry out its intended purpose (i.e. combatting organized crime). On 6. Although H.R. 1046 is a step in the right direction, there are many more problems that still need to be addressed. the civil side a primary economic purpose test should be adopted in order to give complete protection to First Amendment freedoms. On the criminal side reforms are needed in the areas of preconviction seizure of assets and right to choose counsel and with the vagueness and overbreadth of RICO in general. Mr. Chairman and Members of the Subcommittee: Thank you for allowing me to come before you today on behalf of the more than 250,000 members of the American Civil Liberties Union (ACLU). The ACLU strongly supports reform of the Racketeer Influenced and Corrupt Organizations Act of 1970, 18 U.S.c. §§ 1961-1968 (RICO). We applaud the efforts to reform civil RICO and commend the Subcommittee for holding these hearings. We encourage prompt passage of the RICO reform legislation, H. R. 1046. I. LEGISLATIVE HISTORY 116 The declared purpose of Congress in enacting the RICO statute was "to seek the eradication of organized crime in the United States by strengthening the legal tools in the evidencegathering process, by establishing new penal prohibitions, and by providing enhanced sanctions and new remedies to deal with the unlawful activities of those engaged in organized crime." Cong. Rec. 35,191 (1970) (Statement of Rep. Sisk). Senator McClellan stated that the purpose of RICO was to provide "a major new tool in extirpating the baneful influence of organized crime on our economic life." 116 Cong. Rec. 25190 (1970). Indeed, organized crime's activities were growing in scope and number, thus stimulating strong bi-partisan support for additional statutory methods to combat its continued expansion. Appearing before the Senate in January of 1970, Lawrence Speiser, then director of the stated, "we strongly endorse Washington office of the ACLU, governmental efforts to stop the |