The opinion of the court was delivered by: SAROKIN
Defendants move before the court to dismiss plaintiff's complaint in this Racketeer Influenced and Organized Crime Act (RICO) action. See 18 U.S.C. Section 1962 et. seq. Defendants argue that failure to raise the RICO claim in an earlier state court action precludes plaintiff from subsequent litigation of this claim under New Jersey's "entire controversy doctrine".
The court grants this motion with great reluctance, since it results in barring what appears to be a meritorious claim by plaintiff. However, this claim, although lacking some of the evidence and further detail now known to plaintiff, was available to plaintiff at the time it instituted the state court action. The failure to assert the RICO claim in the state court proceeding, now bars plaintiff from doing so in this proceeding.
Plaintiff, Printing Mart-Morristown Inc., ("Printing Mart") is in the business of providing printing and printing related services. In 1978, Sharp Electronics contracted with Printing Mart to produce various catalogs and brochures for the electronics equipment it manufactures. The contract explicitly terminated in 1981, but Printing Mart remained Sharp's "in house" printer, completing numerous printing jobs and expanding to provide Sharp with copying services as well.
Beginning in 1984 plaintiff noticed a marked decrease in Sharp's demand for its services. This coincided with the establishment of Sharp's Corporate Purchasing Department designed to centralize Sharp's purchasing activities. Defendants Essenfeld and Sinoway, both Sharp employees, were responsible for supervising this Department.
Plaintiff alleges that defendants Essenfeld and Sinoway coordinated a bid rigging scheme to divert Sharp's printing jobs away from Printing Mart, and to "secure all of the printing work that Printing Mart had done for Sharp in the past for Laurriet Printing in the future". Laurriet Printing is a rival printing corporation.
In January 1986, plaintiff filed suit in state court against Sharp Electronics, its employees Essenfeld and Sinoway, and various other rival printing agencies who plaintiff believed to be participants in the fraud. See Exhibit A attached to defendant Laurriet Printing's Reply Brief. Plaintiff's state court complaint alleged tortious interference with its "prospective economic advantage" as the result of the bid rigging scheme. Plaintiff alleged that the defendants "conspire[d] to intentionally, maliciously and/or negligently exclude plaintiff from bidding on certain printing work to be done for Sharp Electronics". See Complaint, paragraph 3. Specifically, plaintiff asserted that defendants Sinoway and Rosenthal, president of Laurriet Printing, "caused defendants Laurriet, Pippert and Gemini to submit bids or quotations that appeared to be competitive but were in fact rigged to have the work given to defendant Laurriet". Id.1
Subsequent to the dismissal of the state court complaint, plaintiff gained access to various documents and information, including a report prepared for Sharp Electronics by an outside investigative service, detailing instances of insider bid rigging and outlining with particularity the kickback procedures used to defraud Sharp and Printing-Mart.
Plaintiff had not been aware of this report, prepared at the request of one of Sharp's officers and completed in December 1985, at the time it filed its state court suit. See Plaintiff's Exhibit E. Plaintiff first learned of the report in May 1986 after a former Sharp employee, Thomas Harofilis, disclosed its contents to Lawrence Qualiano, president of Printing Mart. See Affidavit of Thomas Hartofilis, Plaintiff's Exhibit F.
The report seemingly corroborates plaintiff's allegations that defendants Essenfeld and Sinoway conspired with Rosenthal, president of Laurriet Printing, to circumvent the legitimate bidding process and guarantee that Laurriet received the vast majority of Sharp's printing jobs. The report documents how Rosenthal would call Sinoway and in the course of a phone call would fabricate phoney bids on behalf of Printing-Mart and other vendors, so that Laurriet's bid always appeared lower than the "fictitious" competition. Alternatively, Sinoway and/or Essenfeld would disclose Printing Mart's confidential bids to Laurriet before the bid deadline thereby insuring that Laurriet would be able to enter a more competitive offer. The report suggests that federal and state criminal statutes were being violated by the acts alleged, and that Printing Mart was the target of these activities.
On September 5, 1986, plaintiff filed suit in federal court charging defendants with violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Section 1962 et. seq. Plaintiff alleges that Essenfeld and Sinoway, through defendant Sharp Electronics, and Rosenthal, through defendant Laurriet Printing, constituted an enterprise within the meaning of RICO and that this enterprise engaged in a pattern of racketeering activity to defraud Sharp through a bid rigging and kickback scheme with Laurriet Printing. Plaintiff was injured by these racketeering acts because it was denied legitimate bidding opportunities. According to the plaintiff, the information provided by Mr. Harofilis was necessary to perceive the enterprise and to plead the RICO violations with the specificity required of a RICO plaintiff.