Court analysis of RICO claims in 9/11 terrorism litigation

IN RE TERRORIST ATTACKS ON SEPTEMBER 11, 2001 827 Cite as 349 F.Supp.2d 765 (S.D.N.Y. 2005) 10068(@MBM), 2003 WL 21664679, at *11 (S.D.N.Y. July 16, 2003) (quoting Moss v. Morgan Stanley, Inc., 719 F.2d 5, 17 2d Cir.1983)); see also 18 U.S.C. § 1962. “Civil RICO is an unusually potent weapon . ‘courts should strive to flush out frivo- lous RICO allegations at an early stage of the litigation.’” Katzman v. Victoria’s Se- cret, 167 F.R.D. 649, 655 (S.D.N.Y.1996). [74] The Federal complaint asserts a RICO claim under § 1962(a), which states in part: “It shall be unlawful for any per- son who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through collection of an unlawful debt in which such person has participated a principal within the meaning of 18 U.S.C. § 2, to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the estab- lishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign com- merce.” 18 U.S.C. § 1962(a). “Because the conduct constituting a violation of § 1962(a) is investment of racketeering in- come, a plaintiff must allege injury from the defendant’s investment of the racke- teering income to recover under § 1962(a).” Ouaknine v. MacFarlane, 897 F.2d 75, 83 (2d Cir.1990). The Federal Plaintiffs have not done that here and seem to abandon the § 1962(a) claim in their RICO statements. Accordingly, the Federal Plaintiffs have not stated a claim under 18 U.S.C. § 1962(a). The Federal Plaintiffs’ RICO statements against Arab Bank and the SAAR Net- work assert claims under § 1962(c) and § 1962(d). See 08 MDL 1570 Docket ## 307, 309. Subsection (ce) states, in part: “It shall be unlawful for any person employed by or associated with any enter- prise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirect- ly, in the conduct of such enterprise’s af- fairs through a pattern of racketeering activity.” 18 U.S.C. § 1962(c). “The four elements of Section 1962(¢) are ‘(1) conduct (2) of an enterprise (8) through a pattern (4) of racketeering activity”” U.S. Fire Ins. Co. v. United Limousine Serv., Inc., 3038 F.Supp.2d 482, 451 (8.D.N.Y.2004). “The elements of section 1962(c) must be established as to each individual defen- dant.” Jd. Paragraph (d) states that it “shall be unlawful for any person to con- spire to violate any provision of’ § 1962(a)- (ce). 18 U.S.C. § 1962(d). “The Second Circuit has held in the context of a motion to dismiss that to state a claim under [§ ] 1962(d), the ‘complaint must allege some factual basis for a finding of a conscious agreement among the defendants.’” Am. Arbitration Ass’n, Inc. v. DeFonseca, No. 98 Civ. 2424(CSH), 1996 WL 363128, at *7 (S.D.N.Y. June 28, 1996) (quoting Hecht v. Commerce Clearing House, 897 F.2d 21, 26 n. 4 (2d Cir.1990)); see also Schmidt v. Fleet Bank, 16 F.Supp.2d 340, 354 (S.D.N.Y.1998) (“Bare and conclusory alle- gations are insufficient to withstand a mo- tion to dismiss and a plaintiff must plead facts sufficient to show that each defen- dant knowingly agreed to participate in the [RICO] conspiracy.”). [75,76] Assuming for now that the Plaintiffs have pleaded an _ enterprise, “Tulnder Reves v. Ernst & Young, 507 U.S. 170, 179, 118 S.Ct. 1168, 122 L.Ed.2d 525 (1993), an alleged RICO defendant must have had ‘some part in directing’ the ‘oper- ation or management’ of the enterprise itself to be liable.” Dubai Islamic Bank v. Citibank, N.A., 256 F.Supp.2d 158, 164 (8.D.N.Y.2003). The complaints allege the moving Defendants may have assisted al Qaeda, but they do not allege “anything approaching active ‘management or opera- tion”” Jd. Accordingly, the Court finds HOUSE_OVERSIGHT_017892