Flowers v. Continental Grain Co., Wayne Poultry Div., 85-1672

• Decision Date: 30 October 1985
• Docket Number: No. 85-1672,85-1672
• Citation: 775 F.2d 1051
• Parties: RICO Bus.Disp.Guide 6104 C.M. FLOWERS, Appellant, v. CONTINENTAL GRAIN COMPANY, WAYNE POULTRY DIVISION; George's, Inc.; O.K. Feed Mills, Inc.; and Arkansas Proteins, Inc., Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1051

775 F.2d 1051

RICO Bus.Disp.Guide 6104

C.M. FLOWERS, Appellant, v. CONTINENTAL GRAIN COMPANY, WAYNE POULTRY DIVISION;

George's, Inc.; O.K. Feed Mills, Inc.; and

Arkansas Proteins, Inc., Appellees.

No. 85-1672.

United States Court of Appeals,

Eighth Circuit.

Submitted Oct. 14, 1985.

Decided Oct. 30, 1985.

Joel W. Price, Fort Smith, Ark., for appellant.

Charles L. Harwell, Springdale, Ark., and S. Walton Maurras, Fort Smith, Ark., for appellees.

Before ARNOLD, Circuit Judge, HENLEY, Senior Circuit Judge, and JOHN R. GIBSON, Circuit Judge.

ARNOLD, Circuit Judge.

C.M. Flowers appeals the order of the United States District Court for the Western District of Arkansas ¹ dismissing his action against the defendants for failure to state a claim on which relief may be granted. We affirm.

I.

Defendant Arkansas Proteins, Inc. (Ark-Pro) is an Arkansas corporation wholly and jointly owned by defendants Continental Grain Co., George's, Inc., and O.K. Feed Mills, Inc. Ark-Pro operates a rendering plant in Ft. Smith, Arkansas. Ark-Pro purchases its raw material from its three corporate owners. Its final product is distributed in interstate commerce on the open market. On December 15, 1977, plaintiff was engaged to manage the rendering plant. In a written memorandum which confirmed oral agreements, the president of Ark-Pro promised to formalize within one year a "bonus arrangement" with plaintiff. Plaintiff alleges ² that the defendant corporate owners of Ark-Pro not only required Ark-Pro to buy their entire output of raw materials at prices substantially above the open market price, but each year required plaintiff, in his role as manager of Ark-Pro, to pay an additional amount on "adjusted invoices" for the raw materials already purchased and consumed. The practical result of this practice was to reduce the profits of Ark-Pro to a nominal amount. Plaintiff alleges that as a result, he was unable to earn the bonus which had been promised. In 1983, when the plaintiff complained of this practice, he was told that the poor profit performance of Ark-Pro was the result of his inept management, rather than the owners' pricing practices. Plaintiff also complains that when he informed the owners that expansion of the plant would be required in order to handle increasing amounts of materials, they refused his suggestion and that as a result he was required to work six and seven days a week in order to keep up with demand. He further alleges that these and other actions of the defendants, including an internal audit of plant operations, caused him embarrassment, emotional distress, and ultimately physical illness. In August of 1984, a thoroughly dissatisfied Mr. Flowers resigned his position, allegedly under intolerable duress. He alleges that in addition to the loss of a bonus plan promised by the defendants he was also deprived of earned vacation pay and was not refunded his vested share in a retirement plan.

In November 1984, Mr. Flowers filed suit in the District Court alleging that the defendants had violated the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Secs. 1961-1968, and that he had suffered resulting injuries to business or property, recoverable in treble damages under 18 U.S.C. Sec. 1964(c). He annexed a pendent claim under state law, based on the same operative facts as the RICO claim.

Plaintiff's amended complaint was dismissed with prejudice by the District Court on May 3, 1985, for failure to state a cause of action under RICO. This appeal followed.

II.

The Organized Crime Control Act of 1970, Title IX (Racketeer Influenced and Corrupt Organizations) (popularly known as RICO), Pub.L. 91-452, Title IX, 84 Stat. 941, as amended, 18 U.S.C. Secs. 1961-1968 includes a civil remedy provision which provides: "Any person injured in his business or property by reason of a violation of Sec. 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee." 18 U.S.C. Sec. 1964(c). Section 1962 sets out the substantive criminal offenses upon which the civil remedies of Sec. 1964 are based. Among them are the following:

It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.

18 U.S.C. Sec. 1962(c). We look to Sec. 1961 for a definition of "racketeering activity." Among the activities carefully defined in that section are (a) various serious felonies "chargeable under state law," including, for instance, murder, robbery, extortion, and narcotics dealing; (b) certain acts indictable under Title 18 of the United States Code (including, among others, mail fraud (18 U.S.C. Sec. 1341), wire fraud (18 U.S.C. Sec. 1343), and interfering with interstate commerce by robbery, extortion, or threat of violence (18 U.S.C. Sec. 1951)); (c) certain labor violations under Title 29; and (d) securities and narcotics violations punishable under federal law.

The complaint attempts to allege two types of predicate crimes in order to entitle plaintiff to civil relief under RICO. First, it is claimed that defendants have violated 18 U.S.C. Sec. 1951, a provision commonly known as the Hobbs Act, and described in RICO itself, Sec. 1961(1)(A), as "relating to interference with commerce, robbery, or extortion...." Section 1951 provides in pertinent part as follows:

Sec. 1951. Interference with commerce by threats or violence

(a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined not more than $10,000 or imprisoned not more than twenty years, or both.

(b) As used in this section--

(1) The term "robbery" means the unlawful taking or obtaining of personal property from the person or in the presence of another, against his will, by means of actual or threatened force, or violence, or fear of injury, immediate or future, to his person or property, or property in his custody or possession, or the person or property of a relative or member of his family or of anyone in his company at the time of the taking or obtaining.

(2) The term "extortion" means the obtaining of property from another, with...