NEW YORK (Legal Newsline) - G. Robert Blakey, the man who helped draft the Racketeer Influenced and Corrupt Organizations Act, once told Time magazine that the statute shouldn't be used solely to prosecute Mafia members.
"We don't want one set of rules for people whose collars are blue or whose names end in vowels, and another set for those whose collars are white and have Ivy League diplomas," Blakey told the magazine in 1989.
Thirty-four years after it became law, the RICO Act is being used in at least three instances by corporations against plaintiffs attorneys who allegedly committed fraud during civil litigation against those companies.
In one of those cases, Blakey, a professor at Notre Dame Law School, filed an amicus brief. The case involves a multibillion-dollar judgment against Chevron that it says was the product of racketeering on the part of plaintiffs attorney Steven Donziger and others.
"Society needs more than criminal proceedings to control organized criminal behavior," Blakey wrote in a 2014 memo. "Prosecutors and investigative agencies must also employ civil sanctions to reform corrupted institutions (e.g., unions, market institutions, industries)."
Donziger is an attorney for the Ecuadorian people who were affected by alleged pollution in Ecuador's Amazon from 1964 until 1992 by Texaco, which is owned by Chevron.
In February 2011, after an eight-year trial, a court in Ecuador issued a $19 billion judgment against Chevron for allegedly causing an environmental disaster.
Chevron obtained an injunction from U.S. District Court in 2011 against enforcement of the Ecuadorian verdict and filed its RICO suit against Donziger, the Law Offices of Steven R. Donziger and others, claiming Donziger participated in extortion and criminal conspiracy under the RICO statute.
The RICO suit, which was filed in the U.S. District Court for the Southern District of New York with District Judge Lewis Kaplan, spent three years in court before Kaplan issued a judgment that the $9.5 billion judgment against Chevron was the product of fraud and racketeering.
Kaplan's ruling said Chevron proved multiple extortion acts took place, including the ghostwriting of a judgment and the promise of $500,000 to ex-judge Nicolas Zambrano to sign it. Kaplan also said a report on damages that was supposed to be authored by an independent expert was ghostwritten.
"Not only are Chevron's injuries proximate consequences of the racketeering acts, but Donziger has realized gains from them at Chevron's expense and threatens to realize more," Kaplan wrote.
Donziger is seeking a stay pending appeal to the U.S. Court of Appeals for the Second Circuit.
Jeffrey E. Grell, a partner at Grell & Feist in Minneapolis and adjunct professor at University of Minnesota School of Law, said what makes the Chevron case different is that it is a unique set of facts.
"This case involves extraterritorial application and issues as to what kind of conduct is not U.S.-related," Grell said. "It's a gray area in the law. It comes down to how close the alleged corruption needs to be to the United States when it supposedly occurred in Ecuador when Chevron was doing business in that country."
Another RICO case filed against plaintiffs attorneys is CSX's lawsuit in West Virginia federal court that alleges a former Pittsburgh law firm teamed with a radiologist to fabricate asbestos claims that were hidden among legitimate claims.
The defendants are appealing an approximate $1.3 million verdict against them.
Garlock Sealing is also accusing four law firms of RICO violations. This year, a bankruptcy judge found that Garlock had paid more than its fair share to asbestos plaintiffs because plaintiffs attorneys had withheld exposure evidence.
When it was first created, the RICO Act was designed to prosecute Mob members, as well as those who were actively engaging in organized crime.
Mike Levine, a trial consultant and expert witness, said RICO was designed to prosecute criminals, such as the Mob and drug cartels, and all who took part in those crimes.
"It started out with the Mafia bosses being prosecuted and getting very stiff penalties," Levine said. "Over the years, people began suing corporations under RICO. Those cases, which are civil RICO and not criminal RICO, are different in that it is a corporation being sued for fraud and racketeering, not a crime boss."
Levine, a former senior U.S. law enforcement agent, said in civil RICO cases, he reviews the evidence and information and serves as an expert witness at trial.
Under the federal RICO statute, an individual who is a known member of an enterprise that has committed any two of the 35 crimes - 27 federal crimes and eight state crimes - within a 10-year period may be charged with criminal racketeering.
Those who are found guilty of criminal racketeering may be fined up to $25,000 and sentenced to 20 years in prison per racketeering count.
Additionally, the individual must forfeit all ill-gotten gains and interest in any business gained through a pattern of "racketeering activity."
RICO also permits an individual harmed by the actions of such an enterprise to legally file a civil suit and, if successful, the individual can collect treble damages. U.S. District Judge Frederick Stamp applied treble damages when tripling the jury's verdict in CSX's case.
Pursuing the cases can be costly for corporations. CSX is still waiting to hear if those it sued will pick up its legal bill of more than $10 million.
And in March, Chevron asked for $32.3 million in attorneys fees in the RICO case, reflecting 36,837 hours billed by Chevron's outside counsel at Gibson, Dunn & Crutcher LLP, and 139,747 hours billed to Chevron by attorneys at Huron Consulting Group and Merrill Communications LLC.
Chevron's RICO case against plaintiffs attorney presents unique set of facts, attorney says
