Miranda v. Ponce Federal Bank

Citation948 F.2d 41
Decision Date10 September 1991
Docket NumberNo. 90-2214,90-2214
PartiesRICO Bus.Disp.Guide 7867 Clarissa MIRANDA a/k/a Clarissa Miranda Rodriguez, et al., Plaintiffs, Appellants, v. PONCE FEDERAL BANK, etc., et al., Defendants, Appellees. . Heard
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

Antonio Bauza Torres, Guaynabo, P.R., for plaintiffs, appellants.

Danilo M. Eboli, with whom Francisco A. Besosa and Goldman Antonetti Ferraiuoli & Axtmayer, Hato Rey, P.R., were on brief, for defendants, appellees.

Before SELYA, Circuit Judge, COFFIN and TIMBERS, * Senior Circuit Judges.

SELYA, Circuit Judge.

This appeal seeks to reconfigure the dimensions of the pleading framework for civil actions brought under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968 (1988). Finding the district court's order of dismissal to be consonant with applicable law, we reject the plaintiffs' suggested architecture and affirm the judgment below.

I. BACKGROUND

Because this appeal arises from a dismissal for failure to state an actionable claim, we summarize the facts consistent with our obligation under Fed.R.Civ.P. 12(b)(6) to give the complaint a deferential reading, accepting the well-pleaded facts as true and drawing all reasonable inferences in favor of the plaintiffs. See Feinstein v. Resolution Trust Corp., 942 F.2d 34, 37 (1st Cir.1991); Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 51 (1st Cir.1990); Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir.1989).

Appellant Clarissa Miranda Rodriguez (Miranda) was employed by Ponce Federal Bank (Bank) from June 9, 1980 until March 25, 1988. Beginning in the summer of 1986, Miranda cooperated in a federal money-laundering probe. The Bank's officers repeatedly encouraged her to mislead federal investigators, implied that she might be promoted if she did so, and stressed the importance of fealty to her employer. This gestalt--cooperation on Miranda's part notwithstanding dissuasion by her superiors--continued for almost two years and climaxed in Miranda's dismissal. Eventually, however, the Bank was charged with, and convicted of, numerous currency-reporting violations. See United States v. Ponce Fed. Bank, 883 F.2d 1 (1st Cir.1989) (per curiam).

After losing her job, Miranda brought suit in federal district court against the Bank and several of its officers. 1 Jurisdiction was premised on the existence of a federal question. See 28 U.S.C. § 1331 (1988). On defendants' motion, the district court dismissed most of Miranda's federal claims, but gave her an opportunity to replead certain RICO counts. 2 Miranda did so, purposing in her amended complaint to invoke 18 U.S.C. § 1962(c) and (d). When the defendants renewed their Rule 12(b)(6) motion, the district court acted favorably on it. 751 F.Supp. 18. This appeal followed.

II. STANDARD OF REVIEW

Appellate review of a dismissal under Fed.R.Civ.P. 12(b)(6) is plenary. In the course thereof, we apply the principle that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of h[er] claim which would entitle h[er] to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). There are, however, limits on this generous formulation. For one thing, the complaint must be anchored in a bed of facts, not allowed to float freely on a sea of bombast. See Dartmouth Review, 889 F.2d at 16. That is to say, a court assessing a claim's sufficiency has no obligation to take matters on blind faith; "[d]espite the highly deferential reading which we accord a litigant's complaint under Rule 12(b)(6), we need not credit bald assertions, periphrastic circumlocutions, unsubstantiated conclusions, or outright vituperation." Correa-Martinez, 903 F.2d at 52.

For another thing, in cases alleging civil RICO violations, particular care is required to balance the liberality of the Civil Rules with the necessity of preventing abusive or vexatious treatment of defendants. See, e.g., Figueroa Ruiz v. Alegria, 896 F.2d 645, 650 (1st Cir.1990); see also Dewey v. University of New Hampshire, 694 F.2d 1, 3 (1st Cir.1982) (elucidating a similar principle in respect to civil rights suits), cert. denied, 461 U.S. 944, 103 S.Ct. 2121, 77 L.Ed.2d 1301 (1983). Civil RICO is an unusually potent weapon--the litigation equivalent of a thermonuclear device. The very pendency of a RICO suit can be stigmatizing and its consummation can be costly; a prevailing plaintiff, for example, stands to receive treble damages and attorneys' fees. See 18 U.S.C. § 1964(c). For these reasons, it would be unjust if a RICO plaintiff could defeat a motion to dismiss simply by asserting an inequity attributable to a defendant's conduct and tacking on the self-serving conclusion that the conduct amounted to racketeering. Hence, to avert dismissal under Rule 12(b)(6), a civil RICO complaint must, at a bare minimum, state facts sufficient to portray (i) specific instances of racketeering activity within the reach of the RICO statute and (ii) a causal nexus between that activity and the harm alleged.

With these tenets in mind, we turn to the particulars of the case at bar. 3

III. THE RICO ENTERPRISE

Insofar as appellant's suit named the Bank as a RICO defendant, it was clearly insupportable. The statute under which suit was brought provides:

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. § 1962(c). We have consistently interpreted the statutory requirement that a culpable person be "employed by or associated with" the RICO enterprise as meaning that the same entity cannot do double duty as both the RICO defendant and the RICO enterprise. See Arzuaga-Collazo v Oriental Fed. Sav. Bank, 913 F.2d 5, 6 (1st Cir.1990) ("[T]he unlawful enterprise itself cannot also be the person the plaintiff charges with conducting it."); Odishelidze v. Aetna Life & Casualty Co., 853 F.2d 21, 23 (1st Cir.1988) (per curiam) ("[I]t is clear that under § 1962(c) the 'person' alleged to be engaged in a racketeering activity ... must be an entity distinct from the 'enterprise.' ") (footnote omitted); Schofield v. First Commodity Corp., 793 F.2d 28, 29-30 (1st Cir.1986) (identifying similar rulings in other circuits). Because the racketeer and the enterprise must be distinct, Miranda's claim against the Bank cannot succeed.

Appellant's attempt to avoid this result by casting the Bank as an active participant in the RICO scheme is ineffectual. The enterprise, even if itself blameworthy, cannot also be answerable as a defendant under section 1962(c). See Schofield, 793 F.2d at 30. Her attempt to invoke the specter of vicarious responsibility is equally lame. Section 1962(c) does not recognize corporate liability on the enterprise's part under a theory of respondeat superior, even though individual officers or employees of the enterprise, acting within the scope and course of their employment, may themselves be culpable. See id. at 32-33.

We decline to paint the lily. It is enough to say that, as to the Bank, the RICO claims were properly dismissed. 4

IV. THE RICO SCHEMES

Upholding the order of dismissal as to the Bank does not complete our task. Officers of a corporate enterprise may be personally liable for civil RICO violations if they conducted their employer's affairs through a proscribed pattern of racketeering activity. See Schofield, 793 F.2d at 30. We must, therefore, examine the particular allegations of the amended complaint as those allegations pertain to the individual defendants.

The pleadings, though copious, are vague and inexplicit. Read indulgently, the amended complaint and the accompanying case statement, see supra note 3, hint at RICO claims based, variously, on actual obstruction of justice and on conspiracy to obstruct justice. Miranda's appellate brief is in the same vein. At oral argument, however, Miranda's counsel seemed to confess that the only discernible pattern of racketeering activity involved the money-laundering scheme. For the sake of completeness, we overlook the inconsistencies in the appellant's presentation and explore all three theories.

A. Obstruction of Justice.

In her amended complaint, Miranda alleges in substance that the defendants entered into a scheme of RICO activity, the purpose of which was to obstruct the ongoing federal investigation in violation of 18 U.S.C. § 1510 (1988). She then claims that her discharge was in furtherance of this obstruction-of-justice scheme. We believe that the effort to rest a RICO count on this jerry-built foundation possesses three significant flaws.

First, it is settled beyond peradventure that civil liability under 18 U.S.C. § 1962(c) requires a named defendant to have participated in the commission of two or more predicate crimes within the compendium described in 18 U.S.C. § 1961(1). See Feinstein, 942 F.2d at 41; Fleet Credit Corp. v. Sion, 893 F.2d 441, 444 (1st Cir.1990). In her case statement, Miranda, responding to the district court's request that she "[l]ist the alleged predicate acts and the specific statutes which were allegedly violated," speaks only of her treatment at the defendants' hands and cites only 18 U.S.C. § 1510. 5 That statute provides in relevant part Whoever willfully endeavors by means of bribery to obstruct, delay, or prevent the communication of information relating to a violation of any criminal statute of the United States by any person to a criminal investigator shall be fined not more than $5,000, or imprisoned not more than five years, or both.

18 U.S.C. § 1510(a) (1988). The appellant does not allege that she was induced through...

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