Courts to me giving the current data on the pending RICO cases that they have collected.

Mr. CONYERS. Let us enter them both into the record.

[The prepared statement of Mr. Blakey, with attachments follow:]

PREPARED STATEMENT OF PROF. G. ROBERT BLAKEY, NOTRE DAME UNIVERSITY

SCHOOL OF LAW, NOTRE DAME, INDIANA

Prologue

One day when Chicken Licken was scratching among the leaves, an acorn fell out of a tree and struck her on the tail.

"Oh," said Chicken Licken, "The sky is falling! am going to tell the King."

XXX

"Good morning, Turkey Lurkey, Goosey Loosey, Ducky Daddles, Cocky Locky, Henny Penny and Chicken Licken," said Foxy Woxy, "Where are you going?" "Oh, Foxy Woxy, the sky is falling and we are going to tell the King!"

Woxy.

"How do you know the sky is falling?" asked Foxy

"Goosey Loosey told me," said Turkey Lurkey.

XXX

"Chicken Licken told me," said Henny Penny.

XXX

"Then we will run, we will run to my den," said Foxy Woxy, "and I will tell the King."

So they all ran to Foxy Woxy's den, and the King was never told that the sky was falling.

P. C. Asbjornsen, "Chicken Licken"
in T. de Pavla's, Favorite Nursery

1.1

Myth: The Federal Courts Are Being Inundated With

New Litigation Under Civil RICO.

2

1.2

Fact: Civil RICO Litigation Is Neither Wholly New

Nor of Floodgate Proportions.

3

2.2

Fact: RICO was Designed, Not Only To Deal With

Organized Crime, But Also Other Forms of

Enterprise Criminality.

5

3.1

Myth: RICO Was Designed To Deal Only With The

Infiltration Of Legitimate Business.

6

3.2

Fact: RICO Was Designed, Not Only To Deal With The

Infiltration of Legitimate Business, But Also

Other Forms of Enterprise Criminality.

6

4.1

4.2

5.1 Myth: RICO Applies to Mere Contract Disputes.

5.2 Fact: RICO Requires a Showing of Bad Faith, That

is, A Good Faith Dispute Is Not Within RICO.

Myth: The General Remedies Against Litigation

Abuse Are Inadequate.

6.1

6.2 Fact: The General Remedies Against Litigation

Abuse Are Adequate.

7.1 Myth: State Jurisprudence Is Adequate to Deal With

Fraud.

7.2 Fact: State Jurisprudence Is Not Adequate to Deal

with Sophisticated Forms of Fraud.

Myth: RICO Applies To Every Business Transaction

That Uses the Mails or Phones.

6

Fact: RICO Applies Only to Pattern of Unlawful

Behavior, Not Single Transactions.

III

8.1

8.2

9.1

9.2

Myth: Since Law Enforcement Agencies Can be

Depended Upon to Prosecute the Real Malefactors,

Private Enforcement Mechanisms Are Not Needed.

Fact: Law Enforcement Can Not Do the Whole Job.

Myth: Multiple Damage Suits Are Not Needed.

Fact: Multiple Damage Suits Are The Heart of the

Necessary Private Enforcement Mechanism.

10.1 Myth: The Racketeer Label Leads Legitimate

Business People to Settle Garden Variety Fraud

Claims For Extortionate Amounts.

23

10.2 Fact: The Racketeer Label Inhibits, Not

Facilitates, Settlement; Fraud Is Not a Garden

Variety Problem.

RICO Reform: Twenty Questions

(1) Why change the "racketeer" label for all RICO

actions--criminal and civil--drug dealing and

fraud--if it is only objected to in commercial

23

29

litigation?

30

(2)

Why require a criminal conviction before private
treble damage suits may be brought if that
limitation is not found in any other similar suit
for sound policy reasons?

30

(3)

Why take away the authority of independent
government corporations to pursue civil RICO
litigation at their own expense with their
seasoned litigators and confine it to the hands of
relatively inexperienced and over-worked assistant
United States attorneys? . . . . . .

31

(4)

(5)

Why retroactively require States to pass special
legislation to authorize city and counties to
continue or pursue civil RICO litigation?
Why eliminate the treble damage remedy in light of
its valuable compensatory, deterrent, and other
features?

(6)

Why limit punitive damage recovery to natural
persons? .

32

(7)

What of not-for-profit or "surrogate entities" for
natural persons including foundations, pension
funds, universities, mutual funds, religious
bodies, etc.?

32

(8)

Why--in the light of the scandals on Wall Street--
give special treatment to the securities industry-
-and exclude it from punitive damage claims?
Has the proposed definition of "pattern" been
carefully drafted?

32

33

(9)
(10) Why limit the statute of limitation for federal
RICO to three years when the State legislatures,
which have considered the issue, have usually set
the period at five years for State RICO suits?
(11) Why extend specificity in pleading to RICO, but
not to other similar private claim for relief?
(12) Why make the elimination of treble damages
retroactive? .

(13) Why not add new predicate offenses to RICO to
reflect the recent addition of new crimes to the
federal code (like murder-for-hire, bank fraud,
etc.)?.

(14) Why not add a parens patriae provision?
(15) Why not make possible recovery for personal
injuries, at least for the predicate offense
involving violence?

(16) Why not assure equitable relief, both temporary and permanent? .

37

(17) Why not authorize international service of process? . .

37

(18) Why not assure the enforcement of voluntary agreements to arbitrate RICO disputes? .

38

(19) Why not provide that jurisdiction is exclusive in the federal courts? .

38

(20) Why not provide for recovery of prejudgment

interest?

38

My name is G. Robert Blakey. I am the William J. and

Dorothy O'Neill Professor of Law at the Notre Dame Law School.
My appearance here today, however, is personal.

Nothing that I

say should be attributed to the Law School or the University.

I. Introduction

In 1970, Congress enacted the Organized Crime Control Act, Title IX of which is known as the "Racketeer Influenced and Corrupt Organizations Act" (RICO), 18 U.S.C. § 1961 et seq. Congress enacted the 1970 Act "to strengthen[] the legal tools in the evidence gathering process, [to] establish[] new penal

...

prohibitions, and [to] provide[] enhanced sanctions and new remedies ..." 84 Stat. 923. Among other things, Congress was concerned about "fraud." Id. at 922.1

Congress found that "the sanctions and remedies available" under the law then current were" unnecessarily limited in scope and impact." Id. at 923. It then provided treble damage relief for "person[s] injured" in their "business or property" by violations of the statute. 18 U.S.C. 1964 (c). At the time, these private civil remedies had been called for by no less than the President, 2 the President's

1 In addition to fraud, RICO covers violence, the provision of illegal goods and services, corruption in labor or management relations, and corruption in government. Blakey, The RICO Civil Fraud Action in Context, 58 Notre Dame L. Rev. 237, 300-06 (1982).

2 "Message on Organized Crime," reprinted in, Hearings before the Subcommittee on Criminal Laws and Procedures, U.S. Senate Committee on the Judiciary, 91st Cong. 1st Sess. 449 (1969) (Senate Hearings).

3

and the

The

Commission on Crime and the Administration of Justice, 3 American Bar Association. 4 In response, the Senate passed the bill 73 to 1. 5 The House passed an amended bill 431 to 26.6 Senate then passed the House bill without objection, and the President signed the legislation on Oct. 15, 1970.7 Today, however, RICO--at least its civil provisions--is under sharp attack from a variety of quarters.8 In fact, it stands largely without friends or supporters. Nevertheless, the attacks against

civil RICO have about them an air of Chicken Licken's concern that the sky was falling down. They also pose the question: will those who raise Chicken Licken's concerns end up

1.1 Myth: The Federal Courts Are Being Inundated With New Litigation Under Civil RICO.

3

4

The Challenge of Crime in a Free Society 208 (1967).

Senate Hearings at 259; Hearings before Subcommittee No. 5, House Committee on the Judiciary, 91st Cong, 2nd Sess. 537 (1970).

8 See generally Goldsmith & Keith, Civil RICO Abuse: The Allegations in Context, 1986 Brigham Young U. L. Rev. 55; Note, Congress Responds to Sedima: Is There a Contract Out on Civil RICO?, 19 Loy. L. A. L. Rev 851 (1986).

9 "Myth"--"a belief

whose truth is accepted

uncritically." The Random House Dictionary 581 (1980).