not file a motion to amend or to add new plaintiffs in response to the motions to dismiss. By that late date, the complaint was fully matured and there was no reason to further amend it.
I construe the assignment from the Third Circuit to be to re-examine the December 27, 1993 ruling in the light of Jaguar and to determine if the change in the law set forth in Jaguar requires a modification of the December 27, 1993 opinion and order.
I do not consider the mandate as requiring consideration of the Proposed Complaint or any other proposed amended complaint.
2. Jaguar: Jaguar Cars, Inc. brought a civil RICO action against the operators of one of its dealerships, Theodore Forkecz, Sr., and his sons, Theodore Forkecz, Jr., and Mark Forkecz. Jaguar charged that the defendants had perpetrated a scheme to submit fraudulent warranty claims to Jaguar through their dealership, Royal Oaks Motor Car Company, Inc., in violation of RICO §§ 1962(c) and (d). The jury returned a verdict against Theodore Forkecz, Sr. and Mark Forkecz. The district court absolved Theodore Forkecz, Jr. of RICO violations.
On appeal Theodore Forkecz, Sr., urged (i) that the evidence was insufficient to find him liable for the RICO predicate acts of aiding and abetting mail fraud and (ii) that Jaguar's RICO claims were legally insufficient because Jaguar failed to establish sufficient distinctiveness between the defendant "persons" allegedly liable for the RICO violations and the "enterprise" through which those persons acted.
The second ground required the Third Circuit to re-examine the distinctiveness requirement set forth in cases such as Hirsch v. Enright Refining Co., 751 F.2d 628, 633 (3d Cir. 1984) and Glessner v. Kenny, 952 F.2d 702, 710, (3d Cir. 1991). As the Court stated, "under this court's interpretation of § 1962(c), as articulated in Glessner, Jaguar's RICO claims would fail unless Royal Oaks was either (1) the victim of the defendant's scheme, or (2) a passive tool through which the scheme was conducted." 46 F.2d at 264.
The court concluded that Jaguar was indistinguishable from Glessner, but nevertheless held that "defendants here are liable under § 1962(c) as persons managing the affairs of their corporation as an enterprise through a pattern of racketeering activity, since this court's application of the distinctiveness requirement to shield corporate officers and directors from § 1962(c) liability does not survive Reves,... and Scheidler..." 46 F.3d at 265.
Thus, the law in this Circuit now is that, "when officers and/or employees operate and manage a legitimate corporation, and use it to conduct, through interstate commerce, a pattern of racketeering activity, those defendant persons are properly held liable under § 1962(c)." 46 F.3d at 269.
3. Effect of Jaguar: The Third Circuit mandate requires reconsideration of the December 27, 1993 opinion and judgment in light of Jaguar.
One ground for dismissing the §§ 1962(c) and (d) RICO claims is no longer tenable. The opinion stated, "because plaintiffs have failed to plead that the RICO 'persons' in this case [the officers, directors and controlling shareholders of GDC] are separate and distinct from the 'enterprise' [GDC], such pleading cannot withstand defendants' motions to dismiss." 845 F. Supp. at 227. That ruling was based upon holdings in cases such as Enright and Glessner which Jaguar held no longer state the law of the Circuit.
There were, however, other grounds for dismissing the RICO claims which were either unaffected by Jaguar or else were confirmed by Jaguar or by authoritative cases decided after December 27, 1993. Jaguar has no effect upon those portions of the opinion and order which, for reasons independent of the "person-enterprise distinction" required dismissal of the RICO claims either in their entirety or as to particular groups of defendants.
For the reasons set forth in the opinion "plaintiffs' RICO claim would be dismissed as to all moving defendants on the grounds that it is time barred even if the claim were not dismissable on other, substantive grounds." Rolo, 845 F. Supp. at 235.
Plaintiffs' aiding and abetting claims were dismissed because plaintiffs' allegations did not meet the "operation or management" test of Reves v. Ernst & Young, 507 U.S. 170, 122 L. Ed. 2d 525, 113 S. Ct. 1163 (1993). This was the test which Jaguar applied when evaluating Theodore Forkecz, Sr.'s contention that the proofs failed to establish aider and abettor liability against him. See also Central Bank of Denver v. First Interstate Bank of Denver, 128 L. Ed. 2d 119, 114 S. Ct. 1439 (1994).
Plaintiffs' aiding and abetting claims (like their RICO conspiracy claims) were also dismissed for failure to plead anything more than general and conclusory allegations of knowledge or participation in a scheme.
The RICO aider and abettor ruling was applicable to most of the defendants (all Mortgagee, Financing and Lot Contract Defendants, outside directors Askew, Clark, Simons and Brinckerhoff, AmBase, Home, Ormsby, Carteret and Cravath, Swaine and Moore).
Thus, even if Jaguar had been decided in December 1993 and applied in this case, the plaintiffs' RICO claims would have been dismissed.
Plaintiffs did not appeal the dismissal of their Securities Act claims.
Jaguar does not speak to plaintiffs' Land Sales Act claims. Nor does Jaguar affect plaintiffs' common law fraud claims which were dismissed pursuant to United Mine Workers v. Gibbs, 383 U.S. 715, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966).
The Third Circuit's mandate "for reconsideration in light of Jaguar Cars" does not contemplate that this court entertain a motion by plaintiffs to file still another amended complaint which would reformulate and restructure their action. Plaintiffs' motion for leave to serve a second amended and supplemental complaint and to add and drop parties will, therefore, be dismissed.
Upon reconsideration of the December 27, 1993 opinion and order of dismissal in light of Jaguar Cars, it appears that one ground for dismissal of the RICO claims is no longer valid, but that there remain other, independent valid grounds to dismiss the RICO claims. Jaguar Cars has no bearing upon the prior dismissal of the Land Sales Act claims, the Securities Act claims and the common law fraud claims.
In these circumstances, a new order will be entered dismissing the complaint as to all defendants.
DICKINSON R. DEBEVOISE, U.S.S.D.J.
DATED: August 24, 1995