Sweeney, Joseph

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Fordham University School of Law

Fordham Law SchoolFLASH: The Fordham Law Archive of Scholarship and HistoryFaculty Scholarship1987Introduction to RICOJoseph SweeneyFordham University School of LawFollow this and additional works at: https://ir.lawnet.fordham.edu/faculty_scholarshipPart of the Law CommonsThis Article is brought to you for free and open access by FLASH: The Fordham Law Archive of Scholarship and History. It has been accepted forinclusion in Faculty Scholarship by an authorized administrator of FLASH: The Fordham Law Archive of Scholarship and History. For moreinformation, please contact tmelnick@law.fordham.edu.Recommended CitationJoseph Sweeney, Introduction to RICO, 12 Tul. Mar. L. J. 7 (1987)Available at: https://ir.lawnet.fordham.edu/faculty_scholarship/822AN INTRODUCTION TO RICOJoseph C. Sweeney*In October of this year, I will have been an admiralty lawyer andproctor in admiralty for thirty years, and I have witnessed the con-servative attitude of the maritime bar on many issues. For instance,most of you are familiar with the Lloyd's hull policy with respect toships; the same form of hull policy has been used consistently fromthe seventeenth century to well into the twentieth century. It canhardly be said that the developments of the last 300 years have notprecipitated a need to change the wording of the hull policy. Theconservative attitude of the maritime bar is similarly evident in char-ter parties, where many clauses are deliberately ambiguous. Admi-ralty lawyers prefer to leave them ambiguous rather than changethem to more closely address the problems that the clauses weredesigned to handle.The Limitation of Liability Statute of the United States serves as aexcellent illustration of the maritime bar's inertia.' The Act wasdrafted in 1851, and poorly drafted at that. Almost 140 years haspassed and no one has seen fit to make the Act any more comprehen-sible. The Act was amended in 18862 and we are still trying to ascer-tain what the amendments were all about. Besides the addition of theSirovich Amendments of 19351 and 1936,4 the only other changeoccurred two years ago when Congress increased the amount of thefund for personal injury and death cases from $60 per ton to $420 perton.5 Except for these amendments, the original statute remains sub-stantially intact.Despite the conservative attitude of our profession, it now occurs tothe maritime bar that perhaps a piece of legislation passed in 1970may speak to the maritime fraud problem. The legislation is, ofcourse, "RICO" - the Racketeer Influenced and Corrupt Organiza-* Professor of Law, Fordham University School of Law. A.B., Harvard University; J.D.,Boston University; LL.M., Columbia University.I. Limitation of Liability Act, 46 U.S.C. §§ 183-189 (1982).2. Act of June 19, 1886, ch. 421, § 4, 24 Stat. 80 (codified at 46 U.S.C. § 188 (1982)).3. Act of Aug. 29, 1935, ch. 804, § 3, 49 Stat: 960 (codified at 46 U.S.C. § 183 (1982)).4. Act of June 5, 1936, ch. 521, § 3, 49 Stat. 1479 (codified at 46 U.S.C. § 183 (1982)).5. Act of Oct. 19, 1984, § 213(a), 98 Stat. 2306 (codified at 46 U.S.C. § 183 (1982)).TULANE MARITIME LAW JOURNALtions Act.6 Maritime fraud has always had a connection with thedocks, yet it is not limited to blue collar crime. The maritime indus-try has always had lightly capitalized companies that might defraudthe unwary, whether in good times or bad times. The current dis-tressed state of the maritime industry has aggravated matters, how-ever, and RICO may prove to be an amenable solution.One problem that has plagued the maritime industry for years ismaritime fraud in the physical movement of maritime bills of lading.A modem solution to this problem is to keep the bill of lading at asingle location and let all transactions proceed by telex. The with-drawal of Chase Manhattan Bank from the SeaDocs system in Janu-ary 1987, however, indicates that this solution will not be a viableoption. Consequently, we are still faced with the possibility of consid-erable fraud in maritime bills of lading.Until the United States Supreme Court handed down its decision inSedima, S.P.R.L. v. Imrex Co.,7 many practitioners viewed RICO'sbroad application as an aberration. My colleague, Mr. DouglasAbrams, has published an important article on Sedima in which henotes that the Supreme Court has construed the RICO statute as notlimiting the classes of litigants that can bring a RICO suit.' While thebroad language Congress used in RICO caused some doubt as to thestatute's constitutionality, Sedima suggests that those doubts can beset to rest.On January 15, 1969, Senate Bill 30, also known as the OrganizedCrime Control Act, was introduced to the Ninety-first Congress. Thestatute was approved by the Senate and the House9 and signed intolaw by President Nixon on October 15, 1970. Title IX of that Actcontains the RICO provisions. The civil RICO provisions of interestto the maritime bar were the work of Senator Roman L. Hruska ofNebraska. 10It is interesting to note that Congress's consideration of the Organ-6. 18 U.S.C. §§ 1961-1968 (1982 & Supp. IV 1986).7. 473 U.S. 479 (1985).8. Abrams, The Place of Procedural Control in Determining Who May Sue or Be Sued:Lessons in Statutory Interpretation from Civil RICO and Sedima, 38 VAND. L. REV. 1477(1985).9. Congressmen William F. Ryan, Abner J. Mikva, and John Conyers, Jr., dissented to theHouse Committee Report, describing Title IX as legislation "run [ ] amuck. It employspenalties and investigative procedures which are both abusive and pregnant with the potentialfor abuse." 1970 U.S. CODE CONG. & ADMIN. NEWS (91 Stat.) 4081.10. For a discussion of RICO's origins, see Blakey, The RICO Civil Fraud Action inContext: Reflections on Bennett v. Berg, 58 NOTRE DAME L. REV. 237, 249-80 (1982).[Vol. 12AN INTRODUCTION TO RICOized Crime Control Act coincided with a period of extreme violencein this country and the world. The national euphoria of the previoussummer incited by the lunar landing had evaporated in the face ofopposition to the government policy in Vietnam. That opposition, attimes, was ugly. On May 4, 1970, four students were killed at KentState University by the Ohio National Guard. This event disruptedcampuses throughout the summer, and continued with an orgy ofrecrimination and protest in response to the activities of the govern-ment in Cambodia and Vietnam. That summer of violence wasclosely followed by international terrorism when four aircraft werehijacked in Europe that September by the "Black September Move-ment" of Palestinians. Violence was no doubt on the mind of theJudiciary Committee as it considered the Organized Crime ControlAct during that fateful summer of 1970.A few words about the substantive provisions of the statute are inorder. It is important to note that the context in which RICO hasbeen enacted is decidedly criminal, an area where plaintiffs' lawyersseldom trespass. Furthermore, it is hornbook law that any judicialconstruction of criminal statutes should be rigorous.RICO is one part of the complex bill entitled the "Organized CrimeControl Act of 1970." 11 Title IX of that statute contains both crimi-nal and civil RICO provisions. As described in the House Report, thethreefold purpose of RICO is:(1) making unlawful the receipt or use of income from"racketeering activity" or its proceeds by a principal in com-mission of the activity to acquire an interest in or establishan enterprise engaged in interstate commerce; (2) prohibit-ing the acquisition of any enterprise engaged in interstatecommerce through a "pattern" of "racketeering activity,"and (3) proscribing the operation of any enterprise engagedin interstate commerce through a "pattern" of "racketeeringactivity."' 2The legislative history behind civil RICO indicates that it wasmeant as a civil remedy for the criminal violations already providedfor in section 1962. Civil RICO is intended to assist in the reform ofcorrupted organizations. It does this by permitting the courts torequire performance bonds by those who deal with corrupted organi-11. Pub. L. No. 9-452, 84 Stat. 922 (codified as amended in various sections of 18 U.S.C.(1982 & Supp. IV 1986).12. 1970 U.S. CODE CONG. & ADMIN. NEWS (91 Stat.) 4010.1987110 TULANE MARITIME LAW JOURNAL [Vol. 12zations, permitting treble damages for any person injured in his busi-ness or property by reason of a criminal violation of RICO, andallowing the collateral estoppel doctrine to be applied in favor of thegovernment in civil proceedings after a successful criminalprosecution.The legislation had something for everybody. For some, RICOprovides a tool well suited for union bashing; it did seem that corruptunions were the target of the bill. For others, it put the federal gov-ernment into the business of prosecuting organized crime, somethingwhich J. Edgar Hoover had been resisting for many years. This wasthe context in which civil RICO was enacted. It is surrounded by,and identified with, the criminal law. Undoubtedly, this racketeeringstigma will influence the frequency and character of RICO suitsbrought by the maritime bar.

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