Eric Allen Engle, Extraterritorial Jurisdiction: Can RICO Protect
Human Rights? A Computer Analysis of a Semi-Determinate Legal
Question, 3 J. High Tech. L. 1 (2004).
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LECTOR! Since I wrote this the U.S. Supreme Court in Morrison
decided that there is a strict presumption against
extraterritoriality, and that the SEC laws ordinarily do not apply
outside of the U.S.I. USING COMPUTERS TO SIMULATE LEGAL DECISION MAKING
The ability of computers to perform complex
tasks no longer remains a subject of serious debate. Thus, the
question whether computers can model or simulate legal
decision-making should be increasingly replaced by the questions:
1) how should computers assist in modelling legal decision-making
and 2) what types of legal decisions are scientifically most
interesting and useful to model. This article contends that
semi-determinate "partially solved" legal problems represent the
most interesting questions susceptible to computer analysis. A
computer program accompanying this article demonstrates this
modeling an as yet
undetermined question: whether the civil provisions of the
Racketeering Influenced and Corrupt Organizations Act (RICO) 2
have extraterritorial affect.
As evidence of the general acceptance of
computer decision-making ability, consider the development of
tests for machine intelligence. This history demonstrates the
capacity and limits of machine intelligence and which types of
legal problems computer programs analyze most efficiently.
Discussion of several of the more significant tests follows.
One of the first tests for artificial
intelligence (A.I.), proposed by computer pioneer Alan Turing, 3
stated that machine intelligence becomes meaningful when a human
no longer can distinguish the machine intelligence from human
This test, known as the Turing Test, appears increasingly quaint.
Although the Turing Test yields practical results, demonstrating
that A.I. has evolved to a level of sophistication where humans
cannot distinguish between responses generated by humans and those
generated by artificial intelligence, it does not demonstrate that
a computer can "think" in a cognitive fashion. 5
Critics of the Turing Test argue that it merely tests a computers
ability to imitate human thought by applying a set of procedural
One of the most well known attempts at using
A.I. to simulate human language in an electronic conversation was
Joseph Weizenbaum's Eliza, a computer program
to operate as a Rogerian therapist, which easily fooled many users
into believing that they were talking online with a human
Chat programs, however, have evolved further since Eliza and
demonstrate increasing sophistication in their attempts to mimic
human personality, including animation and speech synthesis. These
programs still revolve around the concept of mirroring the human's
input, though they also now employ algorithms to learn about the
human, and sometimes even use distributed computing, 8
enabling them to grow beyond a sort of Lacanian "mirror stage" 9
and actually develop independent cognitive processes.
Once the simplicity of the Turing test
became apparent, measures of A.I. shifted to more complex tasks
and researchers developed better tests for A.I.. Another early
test for A.I., which Turing worked on, asked whether the machine
could play a competitive game of chess. 10
Rather than seeking to solve a general problem, namely creating
the ability to mimic humans, researchers now directed computer
intelligence towards solving precise, specific problems. This test
proved a far more successful inquiry. 11
Contemporary chess programs can improve the humility of most of us
by gently reminding us of our intellectual weaknesses. 12
As humans establish tests for machine intelligence, they program
machines to meet those tests, pushing back the horizon of the
question whether a machine can "think". 13
This cycle may even be inevitable: defining a problem is the first
step to solving it so
perhaps any definition
of intelligence will (eventually) be programmable.
One test of A.I. not yet met, however, asks
whether the computer possesses sentience, or self-awareness. To
date, humans have not yet developed machines possessing
self-awareness. But what is self-awareness and how can we
recognize it? Though many difficult questions exist, the A.I.
horizon will probably continue to recede. At least at present,
however, machine sentience remains in the realm of science
Unlike today's computer programs, most
humans not only can perform abstract reasoning, but also can
develop new solutions to new problems. In this area, A.I. has
plenty of room for growth. While researchers may eventually
program a machine to do all this and more, we have not reached
that level of sophistication today. Computers do not yet generally
seek to solve new abstract problems. Rather, at present they most
successfully work within pre-programmed boundaries to solve a
given problem. Why is this? What creative spark do humans possess
that still eludes the machine?
Analysis of A.I. requires an understanding
that humans and machines process information very differently,
causing them to possess different limits and abilities. While
computers operate as extremely fast and accurate calculators with
enormous data storage and retrieval capacity, the human brain
displays comparatively less speed and accuracy in performing
On the other hand the human brain performs other tasks that A.I.
has yet to
achieve, thus allowing humans to
tie their shoes, groom themselves, and discuss abstract concepts
The respective structures of the human brain
and computer reflect the different functions they perform
Like a computer, the human brain consists of different parts that
specialize in specific tasks. 17
While the brain appears to operate as a massive parallel processor
capable of complex functions, 18
computer microprocessors normally operate only sequentially and in
isolation from each other. 19
One individual processor will merely add, subtract, compare, and
store or retrieve information in each sequentially coded
Microprocessors perform these tasks, however, with perfect
accuracy and much greater speed than a human brain. 21
Recently, novel efforts have been made to
use distributed computing to emulate the parallel processing of
the human brain by employing dozens or even hundreds of computers
to perform different parts of the same task. 22
The power that distributed computing offers indicates that
distributed computing will play a large role in the future of
computer science, especially because of the internet. 23
Additionally, attempts to use biological elements to compose
processors and memory, a process known as "bio-computing",
continue to increase. 24
Although bio-computing remains in its infancy, 25
in the near future neuroscience and computer science will
increasingly track each other and probably
eventually merge. 26
Currently, the performance of linear repetitive tasks provides the
best way to understand and employ machine intelligence.
What does any of this have to do with law?
While researchers may eventually program a
computer to do exactly what a lawyer does-interview clients,
determine legal issues, research legal issues, develop legal
arguments, and prepare relevant legal documents. Each of these
tasks involve thinking abstractly to solve new problems outside a
range of pre-programmed problems, requiring ability far beyond
that of today's computers. Any one of these tasks alone,
particularly the diagnostic of the client's legal problem and the
determination of the legal solution, presents many very complex
issues. On the other hand, some tasks, such as automating legal
research and identifying solutions to given legal problems, fall
well within the ability of existing "linear" programming and do
not require any further breakthroughs in computer science. Thus,
rather than focusing on the ultimately more interesting, but
correspondingly more complicated, question of abstract
diagnostics, this article focuses on the more mundane problem of
doing what computers currently do well: solving well defined
Working with a well-defined problem does not
require working with an overly simplistic issue. For example,
someone could write a simple program that would only determine
whether your car's parking time limit has expired:
If (parkingMeter=0) then (fine:=$100);
Such a program, though determinate, also
offers limited use. Thus, this article examines a semi-defined
legal problem: relevant precedents from similar cases do exist,
but no controlling appellate decision has yet been rendered. The
problem presented contains more variables than the parking meter
problem. Such a problem will be sufficiently determinate that we
can reach a lawyerly answer, but sufficiently uncertain that we
won't wonder why we bothered.
II. EXTRATERRITORIAL LAWS: THE ALIEN TORT CLAIMS ACT (ATCA)
AND THE TORTURE
VICTIM PREVENTION (TVPA)
Extraterritorial laws, a necessary blemish
on the symmetry of law when dealing with lawless states or regions
where no effective government exists, do not necessarily signify
Extraterritorial laws can create diplomatic problems, but the
alternative may be lawless brutality. Most important is that all
states have laws with extraterritorial effect. 28
In a world where states manifest themselves both as territory and
citizenry, a clash of legal culture is just about inevitable - and
so are extraterritorial laws.
The Alien Tort Claims Act (ATCA) 29
and Torture Victim Prevention Act (TVPA), 30
two United States laws with extraterritorial application intended
to prevent and remedy attacks on human rights, provide private
of action in tort, both to aliens and
United States citizens, for violations of international law. Other
examples of United States laws with extraterritorial effect are
the Securities and Exchange Commission's laws against securities
and United States antitrust law. 32
Extraterritorial laws, however, often generate problems. They are
the stubborn knot in the smooth grain of the law, where one
state's legal system insists on imposing itself on another's.
The ATCA, a United States law which
essentially exercises United States jurisdiction over torts "in
violation of the law of nations", imports international law into
the domestic system. 33
Created as the Judiciary Act of 1789 34
ATCA provides the basis for ground breaking human rights
Although historically victims of violations of international law
rarely availed themselves of the remedies available under the
ATCA, the universal recognition of certain norms of international
human rights has broadened the application and effect of ATCA. 36
As international customary and treaty law evolve, so also does the
content of ATCA. 37
III. THE RACKETEERING INFLUENCED AND CORRUPT ORGANIZATIONS
ATCA, TVPA, antitrust, and securities laws
clearly have extraterritorial effect. The question of whether RICO
applies extra territorially, which similarly creates a private
cause of action, remains unresolved at the appellate level. The
question thus merits analysis and also provides an appropriate
problem for computer analysis by allowing us to consider an
indeterminate factor, an as yet non-existent appellate decision,
using deterministic computer science methods.
A certain similarity exists between RICO and
the ATCA: both import foreign substantive law as the basis of a
new independent federal claim. Similarly, RICO creates substantive
offences at the federal level and provides both criminal penalties
and civil remedies for a variety of prohibited conduct, including
extortion and similar racketeering activities. 38
RICO "federalizes" state crimes by making a pattern of
racketeering activity a separate independent federal crime if the
racketeering activity affects interstate or international
This legislative economy by importing foreign laws (whether of
foreign states or federated states) shows creativity. Both
statutes have another unusual point in common: each creates a
private law cause of action, essentially in tort, for activity
that may also violate criminal laws. 40
Despite many similarities, the two statutes
diverge on the scope of their remedies. 41
While ATCA does not contain or imply criminal prosecution,
RICO provides both civil and criminal
This fact raises eyebrows among continental civil lawyers, where a
much clearer distinction is made between civil and criminal
remedies. While both ATCA and RICO may seem unorthodox to a
civilian lawyer, certain features of civil law, such as
inquisitorial procedure with an active panel of judges, lay judges
and advisory opinions, seem just as unusual to common law jurists.
Though ATCA and RICO may seem unorthodox, they do not violate
United States international obligations.
This paper and the accompanying computer
program examine the open question of whether RICO has
extraterritorial effect and whether a violation of the law of
nations could constitute the basis of a RICO offense.
Extraterritorial jurisdiction, often problematic because it
represents to some degree interference with another sovereign
state's internal affairs or with its citizens or subjects, remains
a controversial issue. 43
While this paper proposes the use of RICO to
supplement and fortify claims under ATCA or TVPA, it does not
suggest that courts could or should import either foreign
substantive law or international law as the basis of a substantive
RICO offense. While a violation of the law of nations, for example
the use of slave labor, could in theory constitute a legitimate
basis for a RICO action, such a possibility seems even more remote
than the simpler and more important task of determining whether
RICO itself possesses extraterritorial application. Similarly,
this article does not propose that
claims should originate in violations of foreign law. Again, while
such a basis might be possible, perhaps even desirable, it would
further complicate the already difficult task of applying RICO
internationally. This article also does not argue that every
violation of RICO represents a violation of the law of nations, as
required for the basis of an ATCA claim. While some RICO claims,
say, the use of slave labor, would indeed be the basis for an ATCA
claim, other RICO claims are clearly not violations of
international law. But just as antitrust and SEC anti-fraud laws
apply overseas to protect the United States market from corruption
to assure a fair, competitive, and efficient market, RICO, in
certain limited cases, can have extraterritorial application and
for the same reason.
RICO not only applies to individual actors,
but also to corporations. 44
Tortious human rights abuse often occurs as a systematic pattern
of intimidation, forced relocation, and at the extreme, murder
designed to facilitate wealth extraction. While it may be unusual
to think of a corporation, whether a third world partner,
sub-contractor, or subsidiary as being covered by RICO the facts
in Doe v. Unocal 45
or Wiwa v. Royal-Dutch Shell 46
resemble exactly that: violent corporate conduct used to
intimidate, relocate, or even enslave persons in order to extract
wealth from them and their lands.
In addition to covering both individual and
corporate actors, Congress
crafted RICO to apply to both legitimate and illegitimate
RICO not only applies to criminal organizations, but also to
legitimate corporations engaged in white-collar criminal activity.
This especially useful feature of RICO allows courts to dismantle
corrupt organizations, rather than merely prosecuting individuals
involved in criminal activity under traditional statutes. 49
As RICO clearly applies to a broad scope of actors, the issue
worthy of analysis becomes whether RICO can possess
extraterritorial effect under United States law, and, if so,
whether applying RICO extraterritorially complies with United
States international obligations (which appears likely).
The Ninth Circuit addressed RICO's
extraterritorial effect in Doe v. Unocal. 50
The court, however, subsequently vacated their decision and
granted a rehearing en banc, thus failing to dispose of the RICO
issue on the merits. Consequently, although courts have applied
RICO overseas in antitrust and securities regulations cases, no
appellate court has answered the question whether RICO's civil
provisions may apply in cases of torts committed abroad. 51
At least one federal district court has ruled that RICO has
extraterritorial application, not only in cases of antitrust or
securities fraud, but in the case of other federal laws as well.
This article draws heavily on that district court's reasoning, as
set forth in the subsequent case Wiwa v. Royal Dutch Petroleum Co.
1. Jurisdictional Limitations
As a general rule, Congress has the power to
enact laws that apply outside United States' borders. 53
Because both securities law and antitrust law can and do have
extraterritorial effect and because of the common teleology of
both antitrust and securities laws, protection of the market from
fraud, we can infer that other laws, such as RICO, may have
extraterritorial effect in appropriate circumstances. 54
In interpreting statutes, courts presume that laws do not have an
extraterritorial effect, 55
but that presumption can be overcome by a showing of contrary
Congressional intent. 56
Further, if a statute admits of two possible readings, but one of
those readings would be inconsistent with United States'
obligations under international law, that reading will not be
admitted as United States law. 57
Significantly, the RICO statute states explicitly "the provisions
of this title shall be liberally construed to effectuate its
remedial purposes." 58
In practical terms, in order to apply RICO
extraterritorially the court must first find subject matter
jurisdiction. Without a finding of jurisidiction, no substantive
claim can exist. The fact that defendant incorporated or
headquartered their corporation overseas does
not, by the mere fact of its location, render the corporation
immune to RICO prosecution. 59
Some degree of domestic activity, however, must occur in order to
justify RICO jurisdiction over the foreign corporation. 60
The exact extent of domestic activity required for subject matter
jurisdiction under a RICO claim remains somewhat unclear. 61
This degree could be determined, for example, by considering the
totality of the circumstances in the case at bar or by considering
the teleology of RICO or by looking at both.
2. Teleological Approach to Finding Extraterritorial
Jurisdiction Under RICO
Regardless of the proper standard for
extraterritorial application, courts should grant extraterritorial
effect in order to effectuate the purposes of Congress in enacting
Antitrust and securities fraud cases exhibit a common teleology:
the protection of United States domestic markets from corrupt
foreign influences provides the justification of the
extraterritorial application of United States law. 63
The common teleology in both antitrust and securities fraud cases,
the protection of United States' markets, justifies the conclusion
that RICO will be found to have overseas application. 64
Racketeering corruption distorts market signals leading to
uneconomic behavior, creating a highly persuasive market-based
argument given the current legal and political climate. Therefore,
cases like Wiwa v. Royal-Dutch Shell, or
Doe v. Unocal, RICO should apply extraterritorially because
Congress would wish to dedicate limited judicial resources to the
protection of the United States domestic market from corruption. 65
Thus, RICO can and should have extraterritorial application for
practical reasons of market economy.
While the court will probably find that RICO
has extraterritorial effect, under exactly what circumstances
extraterritoriality will apply remains unclear. 66
Unfortunately, those circumstances do not admit of precise
definition. The circumstances required for a finding
extraterritorial effect depend on the specific facts of individual
cases, whether the exercise of jurisdiction will protect United
States' markets, and whether Congress would want limited judicial
resources to be devoted to litigating not only this type of
problem, but the particular instance of this type of problem. 67
Factual complexity creates the practical impossibility of
elucidating a precise general explanation of which cases will
merit a hearing before a United States court. 68
The general teleology, however, does exist to guide courts: where
applying RICO overseas will serve the goal of protecting United
States' markets from racketeering corruption, we can expect that
extraterritorial jurisdiction will be allowed. 69
Thus, a teleological analysis allows us to see how the appellate
court will probably resolve this issue.
3. Possible Standards for Extraterritorial Jurisdiction
When considering extraterritorial
application of RICO in a criminal law context, previous judicial
decisions relating to extraterritorial subject matter jurisdiction
under United States securities and antitrust laws offer guidance
to the courts. 70
In securities and antitrust litigation, courts generally apply one
of two tests in deciding the appropriateness of extraterritorial
jurisdiction: the "effects test" and the "conduct test". 71
These tests may not provide perfect models because they are
"premised upon congressional intent in enacting the Securities
Exchange Act and the antitrust statutes, not the intention of
Congress concerning RICO." 72
The court must look at the specific substantive aspects of an
individual law to determine whether to grant extraterritorial
In securities law cases, courts generally
apply the conduct test or the effects test, while in antitrust
litigation courts generally disregard the conduct test and apply a
modified version of the effects test. 74
Under the securities law conduct test, United States law will
apply extraterritorially whenever fraudulent conduct impacting
United States commerce occurred in the United States, as long as
that conduct surpasses mere preparation for the fraud. 75
The securities law based effects test states that extraterritorial
application of United States' securities law is proper where
predominately foreign conduct has a substantial effect in the
United States. 76
In antitrust cases, courts place little emphasis on where the
conduct occurred. 77
Instead, they use a slightly different version of the effects
test, interpreting the law to have extraterritorial effect "if the
conduct is intended to and actually does have an effect on United
States imports or exports which the state reprehends." 78
In North South Finance, the Second Circuit
discussed both the effects test and the conduct test, but
neglected to decide which, if either of the tests represents the
proper standard for extraterritorial application of RICO. 79
The court suggested, however, that the antitrust-based effects
test may be more appropriate for determining whether RICO has
extraterritorial effect based on the fact that Clayton Act
provided the model for the civil action provision of RICO. 80
The fact that RICO and the antitrust laws both provide for treble
damages, raising concerns about international comity and foreign
enforcement, provides further support for the position that the
antitrust-based effects test should govern the extraterritorial
effect of RICO. 81
Thus, though the issue of the extraterritorial application of RICO
seems clearly defined, courts have not resolved it at the
appellate level. 82
Assuming that the appellate court will
ultimately base its decision on the teleological argument and
allow extraterritorial application of RICO's civil claims, the
question becomes whether the court will then use effects test, the
conduct test, or both. As courts are
parsimonious and prudential, the first decisions will probably not
determine which test to use. Rather, the decision will probably
state that under either test the jurisdiction would (or would not)
exist, and that consequently the court need not decide which of
the two tests applied. 83
Eventually, however, the facts of a case will highlight the
distinctions between the two tests, forcing the court to choose
either the conducts test or the effects test or some combination
of the two. Prudence, judicial economy, and parsimony suggest that
the court will choose both tests, enabling the court to draw on
precedent from both the antitrust cases and the stock-fraud cases.
Both tests serve the same teleological
goals, so the court could legitimately use a combination of the
conduct test and the effect test to allow increased judicial
flexibility. The courts could combine the tests by granting RICO
extraterritorial effect where the standards for either of the two
tests are met. Mirroring the conduct test, the court could base
extraterritorial jurisdiction under RICO upon the occurrence of
conduct beyond mere preparation for fraud within the United
States. Additionally, actions intended to have a substantial
affect on United States commerce and which actually causes such
effect also could provide the basis for extraterritorial
application of RICO. 84
The court could potentially even grant RICO extraterritorial
effect in situations where the conduct caused substantial affects
on United States
commerce, regardless of
intent. This alternative stretches the existing effects test, but
courts may justify such a stretch because the RICO statute is much
broader than antitrust laws. The court could create a broader rule
if it chose, though it probably will not out of prudence.
The appellate court, of course, remains free
to reach other results. 85
The best argument against applying RICO overseas is that RICO's
civil remedies, particularly of treble damages, exists uniquely in
the common law and appear very burdensome from the perspective of
civil law because punitive damages are the exception in that legal
Thus, the appellate court could hold that RICO or its treble
damages provisions do not apply as inconsistent with international
law. That argument, however, ignores that treble damages apply
extraterritorially in ordinary tort cases. Refusing to apply RICO
or its treble remedies provision extraterritorially would reduce
the efficacy of RICO's protection of United States markets from
corruption. Further, United States courts have regularly applied
the ATCA and TVPA over extraterritorial transactions with very few
misgivings from United States allies. Finally, and perhaps most
importantly, in a globalized economy the distinction between
overseas and domestic conduct transactions can be unclear. For all
these reasons, courts will most likely allow extraterritorial RICO
As previously discussed, the appellate court
has several possible doctrinal methods by which it may develop
case law and determine which choices to
The court, however, will most likely allow RICO's civil provisions
to apply extraterritorially in situations where either the conduct
had substantial effects within the United States 88
or where the conduct was intended to and actually did affect
United States imports or exports. 89
Even if one federal appellate court cuts off RICO overseas
entirely, one of the other dozen remaining federal appellate
courts will likely find that RICO can have extraterritorial
application. Barring a serious split among the circuit courts or
outrage among United States' allies (which is very unlikely: no
one has protested much at all about the ATCA or TVPA),
extraterritorial application of RICO likely will not warrant
decision by the United States Supreme Court.
The remaining RICO issues, all relatively
straightforward and uncontroverted, merit a terse examination in
order to provide context for the legal issue of whether RICO has
extraterritorial and also to demonstrate the solution of
determinate legal problems using a computer program.
In order to have standing 90
to bring a private law RICO claim sounding in tort the plaintiff
must demonstrate that he or she personally in fact suffered an
The legal requirements of standing under RICO, rather clearly
established, warrant presentation only to contextualize the
larger issues, whether RICO has
extraterritorial application and applying a computer program,
based on user input, to infer legal conclusions therefrom.
Additionally, the exposition of standing will illustrate some
interesting parallels to tort law. 92
RICO provides a private civil cause of
action where "any person [is] injured in his business or property
by reason of a violation of § 1962." 93
Case law elaborates on this statute, holding that in order to
bring an action the plaintiff must show a substantive violation of
§ 1962; injury to business or property; and causation of the
injury by the violation. 94
Both cause in fact (prong two) and proximate
cause (prong three) must be shown as resulting from breach of
legal duty (prong one), a formula remarkably similar to tort law.
Breach of duty and factual causation, relatively fact dependent
and straightforward concepts, do not warrant detailed abstract
In concrete cases courts determine such issues with relative ease.
It suffices to note that the plaintiff must show that the injury
was factually caused by the same conduct that constituted the RICO
In other words, one or more RICO predicate acts must have caused
the injury. 99
In comparison, proximate cause represents a
much more difficult issue. To prove standing under RICO, the
plaintiff must show that the violation of § 1962 proximately
caused injury to his property or business. 100
In tort law,
courts usually determine
proximate causation either using Hand's test (cost of prevention
v. cost to repair) or the forseeability test (where a special
relationship exists, a legal duty exists and it is thus forseeable
that the defendant would be liable for their conduct). While RICO
seems to ignore the "special relationship rationale" and "Hand's
test", it still employs the language of "forseeability." RICO
defines proximate cause as "[a] substantial factor in the sequence
of responsible causation, . . .[where] the injury is reasonably
foreseeable or anticipated as a natural consequence." 101
If these elements exist, then a private cause of action under RICO
It shall be unlawful for any person employed
by or associated with any enterprise engaged in, or the activities
of which affect, interstate or foreign commerce, to conduct or
participate, directly or indirectly, in the conduct of such
enterprise's affairs through a pattern of racketeering activity. 102
Under § 1962(c)
the plaintiff has the burden of
proof for the following elements: conduct of an enterprise;
through a pattern of racketeering activity." 103
In addition, the plaintiff must prove that there is a commercial
nexus between the act and interstate commerce in order to invoke
1. Conduct of a RICO Enterprise
Congress defined the term "enterprise" for
RICO purposes broadly. A RICO enterprise "includes any individual,
partnership, corporation, association or other legal entity, and
any union or group of individuals associated in fact although not
a legal entity." 104
One test for whether an enterprise exists for RICO asks whether a
group of persons have associated with the mutual goal of engaging
in a course of conduct. 105
Unincorporated associations, corporations, partnerships and groups
of individuals can all theoretically constitute a RICO enterprise.
Another test for whether a group constitutes a RICO enterprise
asks if the defendant is an 'individual or entity capable of
holding a legal or beneficial interest in property'. 107
RICO enterprises may even include government entities. 108
For the purposes of § 1962(c)
, the RICO "person" accused of
conducting the affairs of the RICO "enterprise" through a pattern
of racketeering activity must exist distinctly from that
A RICO claim can succeed, however, where only "partial overlap"
exists between the RICO person and the RICO enterprise. 110
Similarly, under ordinary circumstances a parent and subsidiary
cannot constitute a RICO enterprise where the predicate acts
occurred within the scope of the agency relationship. 111
however, the agent-subsidiary fails to
act within the scope of the agency relationship RICO can apply to
a corporate parent and its subsidiary. 112
2. Through a pattern
In order to succeed on a RICO claim, the
plaintiff must demonstrate that the defendant's acts constituted a
pattern of racketeering activity. 113
Specifically, the plaintiff must allege "a series of allegedly
criminal acts" independent of the enterprise itself. 114
The plaintiff must prove that each defendant committed at least
two RICO predicate acts, and that the alleged predicate acts
related to each other and "amount to, or. . .otherwise constitute
a threat of, continuing racketeering activity." 115
3. Of racketeering activity (predicate acts)
RICO does not address all criminal acts, but
rather only a certain number of predicate acts denoted in §
The RICO statute defines "racketeering activity" as commission of
any of several "predicate acts" listed in § 1961(1), including
engaging in or threatening to engage in murder, kidnapping
gambling, arson, robbery, bribery, extortion, as well as acts
which are chargeable under state law and punishable by
imprisonment for more than one year. 117
Violations of the Hobbs Act also may constitute
predicate act for the purpose of finding racketeering activity. 118
The Hobbs Act essentially outlaws robbery, or extortion, which
interferes with interstate commerce. 119
Substantive state criminal offences can also
constitute a predicate act under RICO. 120
In interpreting racketeering statutes, courts treat references to
state law as intended to broadly define the types of illegal
activity proscribed by the federal statute. 121
While RICO incorporates substantive state offences by reference,
the reference merely serves to define a generic category of
activities that violate RICO. 122
Therefore, the court does not need to charge the elements of the
substantive state crimes that constitute the racketeering activity
to prevail on a RICO claim. 123
Likewise, state procedural defenses are not available to a
defendant charged with a violation of RICO. 124
Ironically, this means an alleged state crime could constitute a
predicate offense, despite acquittal by the state court. 125
The rationale for this bifurcation is that because the federal
offense is independent of the state offense the state procedural
limitations are irrelevant to the definition of a new and
independent substantive offense. At least one court has explicitly
stated, "[c]ongress did not intend to incorporate the various
states' procedural and evidentiary rules into the RICO statute." 126
While the predicate acts exist independent
of their state law counterparts and
unrestricted by state procedural limitations, predicate acts based
on state law must "include the essential elements of the state
The basic substantive (as opposed to procedural) elements, such as
the specifc acts that constitute actus reus as well as mens rea,
must be included in the federal offense. This impacts the
determination of the extraterritorial applicability of RICO. Is
the location of the crime an essential substantive element of the
crime (which would limit the application of RICO to the U.S.
territory or perhaps U.S. citizens)? Or is instead the territorial
locus of the crime within the territory of one of the several
states merely a procedural form? At least one court has ruled that
the location of the crime within a state's borders does not
constitute a substantive element of the crime, but rather
represents a procedural aspect. 128
Thus, the RICO predicate act can occur outside the territory of
the United States. As a consequence, RICO could have
4. Commercial Nexus
Under federal statutes, such as RICO, the
plaintiff has the burden of proving federal jurisdiction.
Specifically, the plaintiff must prove that the enterprise engaged
in predicate acts that affect interstate or foreign commerce. 129
Given the broad definition of interstate commerce in contemporary
constitutional law, plaintiffs should meet this procedural
requirement with relative ease.
RICO outlaws not only substantive crimes,
whether in state or federal law but also conspiracy to commit
substantive offences. According to § 1962(d)
it is "unlawful for any person to
conspire to violate any of the provisions of subsection (a), (b),
or (c)" of § 1962
Plaintiffs must allege an agreement between
defendants and others to facilitate the commission of a violation
of section 1962(c)
RICO does not require that co-conspirators in a § 1962(d)
conspiracy know of all violations by
other conspirators in furtherance of the conspiracy. 132
Complicity, or aiding and abetting the commission of a RICO
offense, however, does not constitute a RICO predicate act, 133
nor will it suffice in securities law. 134
This synopsis of RICO law sets the stage for
analysis of the computer program which represents the law exposed.
We now turn our attention to the program as an example of using
computers to help solve legal problems.
IV. THE COMPUTER PROGRAM:
The computer program accompanying this
article presents a model of all of the previously addressed legal
points. Based on a series of questions, the program determines the
defendant's liability under RICO and generates a brief report of
its findings, including citations to relevant legal authority.
Programmatically, this approach presents a
rather closed system, in that the program really only demonstrates
the information contained in this article. It allows the reader,
however, to explore the various possible combinations of facts and
laws. Further, it generates legally founded answers to the
specific questions it seeks to answer. In contrast, an open
program would seek to determine the answer for a much less focused
problem, for example whether a crime was committed. Such a program
would have to work with far more general concepts. It would also
probably have to "learn" from the users inputs and save its
results as a database. While such tasks are programmatically
possible, this program seeks to solve an area of law more tightly
defined. Hopefully, future efforts will consider solutions to
"open" general problems such as which legal arguments could be
used by either plaintiff or defendant and which of those arguments
would be likely to succeed - that is, a legal diagnostic. Future
programs will learn from session to session by storing data
generated reading from it and modifying it with each session,
thereby "learning" to solve the problem presented to the program.
Such a task represents a challenge more complex than the problem
addressed by this article. The computer program at
hand, however, serves to illustrate how A.I.
can address a novel question: whether the RICO can be used as a
supplement to the ATCA and TVPA as a remedy to violations of human
rights overseas, particularly in the third world.
B. Instructions for using the Program
The program is actually remarkably
straightforward. There are four main buttons on the left side of
the program's display, labelled "Extraterritorial Jurisdiction",
"RICO Standing", 1962(c) and 1962(d) which allow you to test a
specific case to determine respectively: Whether RICO has
extraterritorial effect in an ATCA case. This is actually a novel
legal issue and does not appear to have been determined at the
appellate level. The remaining legal issues, though solidly
determined by appellate courts remain interesting as potentially
applicable to ATCA/TVPA type cases. Namely, whether a plaintiff
has legal standing to bring a RICO claim (RICO Standing), and
whether the substantive provisions of RICO § 1962(c)
or § 1962(d)
apply to the case whose facts you
provide. Beneath the buttons is a yellow "virtual legal pad" where
the output of the program will appear, with legal citations. You
can cut and paste from the "virtual legal pad." Note that the
contents of it are erased when you press any of the four buttons
to launch a question session.
In conclusion, computer programs can analyze
probable legal outcomes in an area of law where there is no
appellate authority. The program does not contain within it the
diagnostic for determining how an appellate court decides
undetermined issues discussed in this article. Those principles
could be termed: (1) parsimonious decision making - the court
decides only those questions which must be decided ignoring other
questions or at most answering them hypothetically (the latter as
a hedge in case their decision is appealed); (2) judicial economy
- judges use established legal concepts whereever possible rather
than inventing new ones; (3) legal realism - judges try to decide
cases such that they leave themselves and appellate courts enough
doctrinal maneuverability that there decision can be "hedged" and
"distinguished" on appeal; and (4) stare decisis - a preference
for distinguishing legal decisions from each other rather than
overruling them where possible.
A host of other jursiprudential (in the
sense of prudent judgment) criterion could be discovered or
elaborated. But while it is true that such principles clearly
guide judges they are almost never elucidated as such! This may be
because the "general principles of law" are not a source of legal
authority in the common law, unlike the civil law and
international law where generally recognized principles of law
such as proportionality or the right to self defense can be
sources of law. Common law judges are notoriously uncomfortable
with deductive reasoning, preferring induction
wherever possible though in fact deduction is an integral part of
civilian legal systems and international law.
Though heuristic principles for predicting
how judges think are not elucidated in the common law as legal
principles, they do in practice exist. Developing such principles
to predict how judges reason in even less determinate cases than
the example here (RICO's extraterritorial applicability) could be
the basis for future research and development of decision making
programs. However, the greater the abstraction the less certain
are outcomes: practical principles in the common law could be
found but to expect perfect prediction from pure abstraction in an
inductive legal system is like squaring the circle. It might be
possible in theory, but developing the algorithm to do so
perfectly will probably prove impossible in practice. By focusing
on the less abstract question of RICO's extraterritorial
applicability, the paper would be able to reach a determinable and
justifiable result which also may help appellate courts in
deciding this issue when it eventually reaches them. Naturally,
future research will work on developing more abstract general
solutions to legal problem solving, just as initial efforts at
writing chess programs for computers began with the humble
"knights tour" and eventually reached playability and finally
began thrashing most humans soundly.
While we may be decades from the point where
computer programs will be able to hear evidence, make rulings on
motions, choose between arguments, apply
arguments, and reach balanced and well thought out conclusions we
should not say that such is impossible. Rather we should ask
ourselves what is possible. It is possible to use a computer to
ask a series of questions and from the answers to those questions
reason to legally supported outcomes. If we are one day to develop
programs capable of legal diagnostics we should focus on the
possible while seeking to constantly stretch it a bit further.
Hopefully this program is one example of such an effort. 135
Eric Allen Engle holds a J.D. from St. Louis University, a D.E.A. from
UniversitÃ© Paris II (PanthÃ©on-Assass), a second D.E.A. from
UniversitÃ© Paris X (Nanterre) and an LL.M.Eur. from the UniversitÃ¤t
Bremen. He maintains a personal website at http://www.lexnet.bravepages.com
with links to on-line law resources. His other writings can be found
either on his web-site, on Lexis/Westlaw or via Google. He is a
research fellow at the Center for European Legal Policy at the
UniversitÃ¤t Bremen where he teaches courses in United States tort
law and international human rights law. The author wishes to thank
Metacard Corp. (http://www.metacard.com) and Runtime
Revolution Ltd. (http://www.runrev.com) for supporting
this project with their fine program.
18 U.S.C. §§ 1961-1968 (2000).
See The Alan Turing Homepage, at http://www.turing.org.uk/turing
(providing information on Alan Turing and his work).
See Dennis Patterson, Book Review Essay, Fashionable Nonsense, 81
TEX. L. REV. 841, 883 (2003) (discussing the well-known "Turing
Test", which uses a computer program to model human cognitive
thinking). The Turing Test, developed in 1950, asks humans to
communicate through a computer terminal and attempt to differentiate
between responses created by a computer and those created by a human
being. Id. The Turing machine, a mental construct, can scan an
infinite amount of atoms of symbolic code, read and write to and
from that code, and remap the code to another symbol system. See
also Paul Ming, Virtual Turing Machine (VTM) (1997), at http://www.nmia.com/~soki/turing
(providing example of Turing Machine); A.M. Turing, Computing
Machinery and Intelligence, 59 Mind 433 (1950), available at http://www.loebner.net/Prizef/TuringArticle.html.
See Patterson, supra note 4, at 884.
Peter Sanderson & Hilary Sommerland, Exploring the Limits to the
Standardization of the Expert Knowledge of Lawyers: Quality and
Legal Aid Reforms in the United Kingdom, 52 SYRACUSE L. REV. 987,
989 (2002) (discussing criticism of the Turing
Joseph Weizenbaum, ELIZA--A Computer Program for the Study of
Natural Language Communication Between Man and Machine, 9 COMM. OF
THE ACM #1, 35-36 (1966), available at http://i5.nyu.edu/~mm64/x52.9265/january1966.html.
A Rogerian therapist offers counseling in a passive manner, such as
by asking leading or open ended questions. See The Turing Test: Alan
Turing and the Imitation Game, at http://www.psych.utoronto.ca/~reingold/courses/ai/turing.html.
See Internet-based Distributed Computing Projects (Kirk Pearson ed.
2003) at http://www.aspenleaf.com/distributed
(2003) (discussing concept of distributed computing). Distributed
computing involves dividing a large problem into several smaller
problems and then distributing the small problems to several
different computers. Id. The computers generate solutions and then
the solutions are combined to create a solution to the original
problem. Id. The machines simulateneously process and compare their
results with those of other computers in the distributed network.
Id. For an example of a distributed artificial intelligence "chat"
bot, see ALICE at http://www.alicebot.org.
Jacques Lacan, The Mirror Stage as Formative of the Function of the
I as Revealed in Psychoanalytic Theory, in ECRITS - A SELECTION
(Tavistock Publications 1977), available at www.stanford.edu/dept/HPST/critstudies/LacanMirrorStage.pdf.
See Bill Wall, Computer Chess History, at http://www.geocities.com/SiliconValley/Lab/7378/comphis.htm
(providing brief history of use of computers to play chess). In this
field, as elsewhere, Turing was one of the first to consider using
the computer to solve chess problems. Andrew Hodges, The Alan Turing
Internet Scrapbook, at http://www.turing.org.uk/turing/scrapbook/ai.html.
See Mark Baker, Artificial Intelligence- An Overview, at http://atschool.eduweb.co.uk/mbaker/ai.html
(disucssing use of games, such as chess, as measure of artificial
intelligence). Although chess champion Gary Kasparov prevailed in
the Supercomputing '96 Chess Challenge against Deep Blue, IBM's
parallel computing system, the computer demonstrated the ability of
artificial intelligence to compete with the best chess players in
the world. Id.
See Ralf Seliger, The Distributed Chess Project, at http://wind.prohosting.com/chessHTML/project.html
(offering interesting examples of use of
distributed computing to solve chess problems).
See, e.g., Mark Ward, Past is the Future for Hollywood's Robots, BBC
NEWS, September 10, 2000, In Depth: Artificial Intelligence,
available at http://news.bbc.co.uk/1/hi/in_depth/sci_tech/2001/artificial_
intelligence/1530702.stm (providing explanation of history of
development of artificial intelligence standards).
See generally ARTHUR C. CLARKE, 2001: A SPACE ODYSSEY (New American
Library 2000) (1968). Science fiction author Arthur C. Clarke,
doubtlessly influenced by Turing's test, predicted that the machine
would be able not only to emulate humans, but also to develop
complex solutions to general problems and sentience by the turn of
the last century. Id. Obviously, Clarke's prediction failed.
See infra notes 18-19 and accompanying text.
See, e.g., Michael E.R. Nicholls, Psychophysical and
Electrophysiological Support for a Left Hemisphere Temporal
Processing Advantage, 12 NEUROPSYCHIATRY, NEUROPSYCHOLOGY, AND
BEHAVIORAL NEUROLOGY, 11, 12 (1999), available at http://opax.swin.edu.au/~333427/gapdetect.pdf.
See, e.g., M.K. Holder, What does Handedness have to do with Brain
Lateralization and Who Cares? (2001) at http://www.indiana.edu/~
(defining parallel processing as "simultaneous processing by two or
more processing units"). The human brain works by devoting different
processors or sectors of the brain to the solution of each of the
separate parts of a problem. Id. See also Search390.com,
Definitions, "parallel processing", (2003) at http://search390.techtarget.com/sDefinition/0,,sid10_gci212747,00.html
(stating parallel processing consists of dividing program
insutrctions among multiple processors).
See, e.g., THE NEW DICTIONARY OF CULTURAL LITERACY, HOUGHTON MIFFLIN
COMPANY (E.D. Hirsch, Jr. et al. eds., 2002), http://www.bartleby.com/59/23/serialproces.html.
define=microprocessor&search.x=29&search.y=13 (defining the
microprocessor). A microprocessor can perform calculations such as
addition, subtraction, division, or
multiplication, and store or retrieve results. Id. A microprocessor
is a computer chip made of silicon, which functions as the brain of
the computer. Id. The chip uses a "bus" to send and receive
See Mark Baker, Artificial Intelligence- An Overview, at http://atschool.eduweb.co.uk/mbaker/ai.html
(comparing the ability of human brain and artificial intelligence).
While IBM's Deep Blue chess program processed 50 to 100 billion
possible moves in a three minutes time frame, Gary Kasparov won the
Supercomputing '96 Chess Challenge because the human brain can
consider factors beyond the simple algorithm applied by the
computer, including abstract reasoning, problem solving skills,
experience and intuition. Id.
See, e.g., http://www.aspenleaf.com/distributed
(providing introduction to distributed computing).
See supra note 8 and accompanying text. Distributed computing
involves connecting several computers into a network and then using
each computer to solve a part of a large problem. Id. For a
technical examination of the software problems and possibilities of
distributed computing, see SAMUEL C. KENDALL ET AL., A Note on
Distributed Computing (1994) at http://research.sun.com/techrep/1994/abstract-29.html.
See Simon L. Garfinkel, Biological Computing, May/June TECHNOLOGY
REVIEW 70, 77 (2000), available at http://www.simson.net/clips/2000.TR.BiologicalComputing.htm
(discussing concept of biocomputing). Biocomputing involves the use
of biological elements in computation. Id. Biological processes and
computing processes are both electrical processes. Id. Thus, in
theory it is possible to use animal cells as elements of a computer.
Id. See also David Steffen, An Introduction to Biocomputing (1996)
(discussing use of computer programs for biological sequence
Pacific Symposia on Biocomputing (2003) at http://psb.stanford.edu/psb03/
(providing full text of all conference proceedings from 1996-2003).
The Pacific Symposium on Biocomputing is a yearly multidisciplinary
conference for the discussion of issues regarding computational
See The Bioinformatics Center at Rensselaer and Wadsworth, at http://www.bioinfo.rpi.edu
(discussing recent growth of bioinformatics field). Bioinformatics
combines the disciplines of biology, computer science, and information technology. Id.
See Grupo Protexa, S.A. v. All Am. Marine Slip, 856
F. Supp. 868, 881 (D.N.J. 1993) (stating international
community demands high seas remain free and passable); Ali v.
F.3d 873, 876 (9th Cir. 2003) (stating no government exists in
Somalia); Bridas Corp. v. Unocal Corp., 16
S.W.3d 893, 903 (Tex. App. 2000) (stating Arghanistan follows
non-secular Islamic law, lacking any governmental legislation of
judicial precedent). Although a civil code was created in
Afghanistan in 1960s, only the northern region of the country
applies it. Id.
See, e.g., http://www.legifrance.gouv.fr.
The French Penal Code for example punishes the offences of Genocide
(Article 211-1), and Other Crimes Against Humanity, (Articles 212-1
and 212-3). Id.; see also http://www.ulb.ac.be/droit/cdi/loi2003.html
(providing example of extraterritorial law in Belgium concerning the
suppression of grave violations of international human rights law).
28 U.S.C. § 1350 (2000). ATCA provides that the
federal district courts have original jurisdiction over any civil
action brought by an alien as a result of a tort committed in
violation of international laws or a United States
Torture Victim Protection Act of 1991, Pub. L. No. 102-256, 106
Stat. 73 (1992).
See, e.g., Alfadda v. Fenn, 935
F.2d 475, 478 (2d Cir. 1991) (discussing extraterritorial
effect of Securities Exchange Act). The Securities Exchange Act does
not expressly state whether or not it possesses extraterritorial
effect, requiring the courts to determine Congress's intent. Id. The
courts have developed two tests for determining if a federal court
has subject matter jurisdiction over a foreign plaintiff's
securities fraud claim: the effects test and the conduct test. Id.
The conduct test holds federal jurisdiction proper where the
defendant's allegedly fraudulent conduct in the United States
consists of more than preparation for fraud and the defendant's
action or failure to act directly causes injury to the foreign
plaintiff. Id. The effects test grants the federal courts
jurisdiction where the fraudulent activity outside of the United
States has a substantial effect within the United States. Alfadda,
935 F.2d at 478.
Section one of the Sherman Act prohibits contracts, combinations,
and conspiracies designed to restrain interstate commerce. 15 U.S.C. § 1 (2000). The United States Supreme Court
has identified three broad categories of conduct that Congress may
constitutionally regulate under its Commerce Clause power: the use
of the channels of interstate commerce, the instrumentalities of
interstate commerce, or the persons or thigns in interstate
commerce, and finally any conduct that substantially affects
interstate commerce. See United States v. Lopez, 514
U.S. 549, 558-59 (1995) (clarifying the scope and extent of
Congress's power under the Commerce Clause of the United States
Constitution). In some cases, the Sherman Act can apply to conduct
outside of the United States. See, e.g., Matsushita Elec. Indus.
Co., Ltd. v. Zenith Radio Corp., 475
U.S. 574, n.6 (1986) (stating Sherman Act can apply to conduct
outside United States, if conduct affects interstate commerce).
U.S.C. § 1350 (2000). The ATCA states "[t]he district courts
shall have original jurisdiction of any civil action by an alien for
a tort only, committed in violation of the law of nations or a
treaty of the United States". Id.
Filartiga v. Pene-Irala, 630
F.2d 876, 878 (2d. Cir 1980) (discussing origins and history
of ATCA). The First Congress created the Judiciary Act of 1789, c.
20, § 9(b), 1 Stat. 73, 77 (1789), which provided
that the federal district court will have original jurisdiction
"over all causes where an alien sues for a tort only [committed] in
violation of the law of nations". Id.
See Helen C. Lucas, Comment, The Adjudication of Violations of
International Law Under the Alien Tort Claims Act: Allowing Alien
Plaintiffs Their Day in Federal Court, 36 DEPAUL L. REV. 231, 233
(1987) (discussing cases brought under ATCA, alleging human rights
violations). ATCA serves an crucial role in protecting international
human rights because international laws that create individual
rights generally fail to create an accompanying right of
enforcement. Id.at 239.
Filartiga v. Pena-Irala, 630
F.2d 876, 887 (2d Cir. 1980) (holding jurisdiction exists
under ATCA to bring cause of action against foreign defendant for
torture). Neither the plaintiff nor defendant were United States
citizens, yet the court found United States jurisdiction under ATCA
because torture represents a violation of the law of nations. Id.
Filartiga, the first modern case to use ATCA to defend the
internationally recognized human right of freedom from torture, has
provided precedent for numerous cases since.
See, e.g., Wiwa v. Royal Dutch Petroleum Co., 226
F.3d 88, 104 (2d Cir. 2000) citing Filartiga v. Pena-Irala, 630
F.2d 876, 887 & n.21 (2d. Cir. 1980) (stating since
Filartiga decision, litigants increasingly apply ATCA for basis of
18 U.S.C. §§ 1961-1968 (2000).
U.S.C. § 1962 (2000).
U.S.C. § 1964 (2000) (providing civil remedies for violation
U.S.C.A. § 1962); See also 28
U.S.C. §1350 (2000) (providing private civil cause of action
for violation of international laws).
U.S.C. §1963 (2000), with 28
U.S.C. §1350 (2000).
U.S.C. § 1965 (2000).
See, e.g., Larry D. Newman, Comment, RICO and the Russian Mafia:
Toward a New Universal Principle Under International Law, 9 IND.
INT'L & COMP. L. REV. 225, 244 (1998) (discussing
extraterritorial effect of RICO). The article
states "[e]ven though courts agree that RICO is to be given very
broad application, its use remains questionable in extraterritorial
litigation for violations that reach beyond the borders of the
United States or violations that are committed by foreign parties
[due to comity and sovereignty]". Id.
U.S.C. § 1961 (2000) (providing definitions for interpretation
of RICO). The statute defines enterprise to include "any individual,
partnership, corporation, association, or other legal entity, and
any union or group of individuals associated in fact although not a
legal entity". Id.
See generally Doe v. Unocal, No. 00-56603, 00-57195, 00-57197,
00-56628, 2002 WL 31063976, at *1 (9th Cir. Sept. 18, 2002),
Rehearing en banc granted, vacated by No. 00-56603, 00-56628, 2003
WL 359787 (9thCir. Feb. 14, 2003). Residents of Myanmar brought an
action for human rights violations against the Myanmar government
and an American Oil Company under ATCA and RICO for alleged human
rights violations, including murder, rape and torture. Id.
Wiwa v. Royal-Dutch Shell, 226
F.3d 88, 92 (2d. Cir. 2000), cert. denied, 532
U.S. 941 (2001) (finding personal jurisdiction in New York
proper over Anglo-Dutch multinational for alleged human rights
violations in Nigeria). The defendant maintained an office and
conducted stock market transactions in New
York. Id. at 93. In Wiwa, like Unocal, a large petroleum company
allegedly profited through human rights abuses and by aiding and
abetting the commission of crimes by supplying arms and possibly
training to Nigerian police and paramilitary forces. Id. at 91.
See United States v. Turkette, 452
U.S. 576, 578 (1981) (holding RICO applies to both legitimate
and illegitimate enterprises). The Court interpreted the language of
U.S.C. § 1961(4) according to its plain meaning, finding that
the statute applied to organized crime as well as to legitimate
businesses. Id. at 580.
Larry D. Newman, RICO and the Russian Mafia: Toward a New Universal
Principle Under International Law, 9 IND. INT'L & COMP. L. REV.
225, 241 (1998). In his article, Newman states "RICO was not only
designed as a tool to be used against organized crime infiltrating
legitimate business; RICO was also to be used as a weapon against
white collar crime and other forms of enterprise criminality". Id.
Id. (stating that RICO provides prosecutors with ability to attack
entire criminal enterprise instead of individual participants).
Unocal, 2002 WL 31063976, at *22 (9th Cir. 2002) (stating that for
RICO to apply extraterritorially, claim must meet either "conduct"
or "effect" test that courts have developed to determine
jurisdiction in securities fraud cases). The court granted summary
judgment in favor of the defendants on the RICO claim, holding that
the plaintiff failed to meet either the conduct or effects test,
necessary for jurisdiction. Id. at *24. Subsequently, the 9th
Circuit vacated this decision and granted a rehearing en banc of the
case. Doe v. Unocal, 2003 WL 359787 (2003).
See Kristen Neller, Note, Extraterritorial Application of RICO:
Protecting U.S. Markets In A Global Economy, 14 MICH. J. INT'L L.
357, 382 (1993) (arguing RICO can and should apply internationally).
Congress' stated purpose in enacting RICO, to protect the United
States' interest in interstate and foreign commerce, and the
extremely broad language used in the statute, both suggest that the
courts should interpret RICO to have extraterritorial effect. Id. at
Wiwa v. Royal Dutch Petroleum Co., No. 96 CIV. 8386 (KMW), 2002 WL
319887, at *20 (S.D.N.Y. Feb. 28, 2002) (holding jurisdiction over
foreign corporation proper under RICO). Although RICO does not
expressly state whether or not it has extraterritorial effect, the
Wiwa court held that a corporation engaged in
illegal conduct may not avoid liability under RICO simply because of
its foreign location. Id. The Wiwa court relied on the Second
Circuits decision in Alfadda v. Fenn, which reasoned that RICO
should apply extraterritorially in appropriate circumstances based
on the plain language of the statute and its legislative history.
Alfadda v. Fenn, 935
F.2d 475, 479 (2d Cir. 1991).
See United States v. Yousef, 327
F.3d 56, 86 (2003).
See Neller, supra note 50, at 357 (proposing analysis of
extraterritorial application of RICO through examination of
jurisprudence in other areas of law).
See United States v. Yousef, 327
F.3d 56, 86 (2003) (discussing standards for overseas
application of United States laws). Though courts presume that laws
only have domestic effect, the intent of Congress may rebut that
presumption. Id. Thus, where a statute is silent as to its
extraterritorial effect, the court must determine "whether Congress
would have intended that federal courts should be concerned with
specific international controversies." Alfadda v. Fenn, 935
F.2d 475, 479 (2d Cir. 1991); See also Bersch v. Drexel
Firestone, Inc., 519
F.2d 974, 985 (2d Cir. 1975) (stating courts
must examine Congressional intent in deciding whether to apply U.S.
law extraterritorially). In evaluating jurisdiction over
predominately foreign transactions, the court should determine
whether Congress intended to dedicate United States resources to the
solution of the problem addressed by the law. Id.; Foley Bros. v.
U.S. 281, 285 (1949) (stating Congressional legislation
applies only within United States unless contrary intent appears);
United States v. Cotten, 471
F.2d 744, 750 (9th Cir. 1973) (stating absent evidence
contrary, courts must presume that Congress did not intend
extraterritorial application); United States v. Vasquez-Velasco, 15
F.3d 833, 839 n.4 (9th Cir. 1994) (stating jurisdiction
normally based on territorial boundaries).
"Where '[t]he locus of the conduct is not relevant to the end sought
by the enactment of the statute. . . it is reasonable to infer
Congressional intent to reach crimes committed abroad."
Vasquez-Velasco, 15 F.3d at 839 quoting Cotten, 471 F.3d at 751.
See The Charming Betsy, 6
U.S. 64, 118 (2 Cranch) (1804) (stating courts should not
interpret United States laws to violate international law if other
interpretations are possible).
Organized Crime Control Act of 1970, Pub. L. No. 91-452, 84 Stat.
947, codified as amended at 18
U.S.C. § 1961) (2000).
See Alfadda v. Fenn, 935
F.2d 475, 479 (2d Cir. 1991) (stating defendant's status as
foreign enterprise does not make defendant immune to RICO). The
court found subject matter jurisdiction on the RICO claims based
upon predicate acts that occured primarily in the United States. Id.
See Wiwa v. Royal Dutch Petroleum Co., 2002 WL 319887, *21 (S.D.N.Y.
2002) (stating various tests exist for determining whether
sufficient domestic activity exists to find subject matter
See North South Finance Corp. v. Al-Turki, 100
F.3d 1046, 1051 (2d. Cir. 1996) (stating extent of domestic
activity required to justify RICO subject matter jurisdiction
extraterritorially remains unclear).
See Neller, supra note 50, at 361 (stating Congress intended for
RICO to have broad effect). Courts have applied the civil provisions
of RICO in areas of law likely unanticipated by Congress, such as
allowing RICO to apply in divorce cases and landlord-tenant
disputes. Id. Despite these alternative uses, Congress has not
modified RICO to limit its scope, suggesting that Congress
intends for RICO to have extremely broad application. Id.
See, e.g., Madanes v. Madanes, 981
F. Supp. 241, 250 (S.D.N.Y. 1997) (discussing goals of
securities and antitrust laws and proper standards for
See Neller supra note 50, at 382 (stating goals of RICO statute
requires extraterritorial application).
E.g., Bersch v. Drexel Firestone, Inc., 519
F.2d 974, 985 (2d Cir. 1975), cert. denied, 423
U.S. 1018 (1975) (stating when dealing with predominately
foreign transaction, court must determine if Congress intended for
United States resources to apply to address problem). In Bersch, a
U.S. citizen instituted a class action against a Canadian
corporation, alleging a misleading I.P.O. prospectus. Id. at 981.
The court considered what Congress would have intended and granted
jurisdiction under the effects test. Id. at 993.
See, e.g., North South Finance Corp. v. Al-Turki, 100
F.3d 1046, 1051 (2d. Cir. 1996).
See Bersch, 519 F.2d at 985.
See Neller supra note 50, at 382.
Id.; See also, Doe v. Unocal, 110
F. Supp. 2d 1294, 1311 (2000) (stating courts evaluate
extraterritorial application of RICO using precedent from securities
and antitrust law).
See North South Finance Corp., 100 F.3d at 1051 (comparing various
tests used to evaluate extraterritorial jurisdiction).
See North South Finance Corp., 100 F.3d at 1052. (2d. Cir. 1996)
(discussing proper test for asserting jurisdiction
See North South Finance Corp., 100 F.3d at 1051 (2d. Cir. 1996)
(discussing various tests for extraterritorial application of U.S.
securities and antitrust laws).
North South Finance Corp., 100 F.3d at 1051 (stating conduct test
asks whether fraudulent conduct beyond preparation occurred in the
Id. (discussing securities law based effects test). The effects
test, as applied to U.S. securities law, allows extraterritorial
application of U.S. law where the foreign conduct has a substantial
effect in the United States. Id.
North South Finance Corp., 100 F.3d at 1051. Courts seldom apply the
conduct test in antitrust cases, focusing on the effects of the
conduct in the United States, rather than where the conduct
North South Finance Corp. v. Al-Turki, 100
F.3d 1046, 1051 (explaining application of effects test in
antitrust cases). In the context of antitrust law the effects test
allows for extraterritorial application of U.S. law if the conduct
in question had and was intended to have an anticompetitive effect
on United States commerce. Id.; see also United States v. Aluminum
Co. of America, 148 F.2d 416, 443-44 (2d Cir. 1945) (creating
effects test used in antitrust litigation). The Court stated that
the Sherman Act does not apply to agreements
intended to effect commerce unless an actual effect on commerce
See North South Finance Corp., 100 F.3d at 1051 (2d. Cir 1996). The
district court dismissed the plaintiff's complaint for lack of
subject matter jurisdiction after they failed to satisfy the
requirements for the conduct test. Id. at 1052. The plaintiffs
admit, however, that they could not alternatively satsify the
criteria for jurisdiction under the effects test. Id. Therefore, the
Second Circuit dismissed the case without deciding which test, if
either, constituted the proper standard. Id.
See North South Finance Corp., 110 F.3d at 1052. (2d. Cir. 1996)
(discussing appropriate test for extraterritorial application of
RICO). The district court refused to grant extraterritorial
jurisdiction to RICO based on failure to pass the conduct test. Id.
The Second Circuit held that rather than applying the conduct test,
the antitrust-based effects test may apply because Congress designed
RICO after the Clayton Act. Id. quoting Agency Holding Corp. v.
Malley-Duff & Assoc. Inc., 483
U.S. 143, 150 (1987).
Id. (comparing 18
U.S.C. § 1964(c) and 15
U.S.C. § 15(a)); see also Doe v. Unocal, 110
F. Supp. 2d 1294, 1311 (2000) (applying securities-based
See North South Finance Corp., 100 F.3d at 1051 (2d. Cir. 1996). "As
these considerations show, specifying the test for the
extraterritorial application of RICO is delicate work. That work has
not been done, but we need not do it now." Id. The Second Circuit
limited their decisions as much as possible, answering only that
which they must, displaying judicial parsimony. Id.
See North South Finance Corp., 100 F.3d at 1051 (2d. Cir. 1996)
(neglecting to define proper standard for extraterritorial
jurisdiction of RICO).
See, e.g., North South Finance Corp. v. Al-Turki, 100 F.3d at 1051
quoting Consolidated Gold Fields PLC v. Minorco, S.A., 871
F.2d 252, 261-62 (2d Cir. 1989) (discussing securites law
effects test as possible guidance for developing test for
extraterritorial application of RICO). The antitrust based effect
test also offers a possible template for extraterritorial
applicaitno of RICO. Id. citing United States v. Aluminum Co. of
America, 148 F.2d 416, 443-44 (2d Cir. 1945); see also Nat'l Bank of
Canada v. Interbank Card Ass'n, 666
F.2d 6, 8 (2d Cir. 1981).
See North South Finance, 100 F.3d at 1052. The Second Circuit
discussed the possibility that either the conduct test or the
effects test applies, yet declines to adopt either approach
definitively. Id. The court refused to assume that Congressional
intent in enacting RICO necessarily justifies adopting either
See supra text accompanying notes 73-77.
See North South Finance, 100 F.3d at 1052, quoting Consolidated Gold
Fields PLC v. Minorco, S.A., 871
F.2d 252, 261-62 (2d Cir. 1989) (discussing effects test as
possible test for extraterritorial application of RICO).
Id. (citing United States v. Aluminum Co. of America, 148 F.2d 416,
443-44 (2d Cir. 1945); see also Nat'l Bank of Canada v. Interbank
Card Ass'n, 666
F.2d 6, 8 (2d Cir. 1981).
BLACK'S LAW DICTIONARY 731 (5th ed. 1983) (defining standing to sue
as requirement that plaintiff suffered injury
or threat of injury by governmental action). This requirement serves
the purpose of ensuring that the plaintiff represents the proper
party to bring the cause of action. Id.
U.S.C. § 1964(c) (2000) (providing cause of action for harm to
person's business or property as result of RICO violation).
Eric Allen Engle, Smoke and Mirrors or Science? Teaching Law with
Computers - A Reply to Cass Sunstein on Artificial Intelligence and
Legal Science, 9 RICH J. L. & TECH. 2 (Winter 2002-2003), at http://law.richmond.edu/jolt/v9i2/Article6.html.
U.S.C. § 1964(c) (2000).
See Hecht v. Commerce Clearing House, Inc., 897
F.2d 21, 23 (2d Cir. 1990) (discussing requirement of
standing); De Falco v. Dirie, 923 F. Supp. 473, 476 (S.D.N.Y. 1996)
(stating elements required for standing under RICO). The court found
that the plaintiff satisfied all three required elements of proper
standing required to bring a claim under RICO. Id.
See Engle, supra note 92.
See Carl v. City of Overland Park, Kan., 65
F.3d 866, 869 (10thCir. 1995) (stating absent duty, liability
for damages does not exist). A duty can arise in a number of ways.
Id. Traditionally, the test for factual causation asks whether the
injury or damages would have occurred but for the actor's conduct.
57 AM. JUR.2d Negligence § 454 (2003). See also, e.g., Excel Corp.
v. Apodaca, 81 S.W.3d 817, 819 (2002) (stating cause in fact exists
if conduct constituted substantial factor in causing injury, without
which the injury would not have occurred).
See, e.g, Allen v. United States, 588
F. Supp. 247, 357 (D. Utah 1984), rev'd on other grounds, 816
F.2d 1417 (10th Cir. 1987), cert. denied, 108 S. Ct. 694
(1988). Factual causation only requires a "rational factual
connection" between the defendant's actions and the plaintiff's
Sedima S.P.R.L. v. Imrex Co., Inc., 473
U.S. 479, 496 (1985) (discussing factual causation requirement
of RICO). The court will find a defendant who violated RICO liable
for treble damages to people injured as a result of the conduct
constituting the violation, but not liable for treble damages under
RICO for injury caused by other actions. Id.
Beck v. Prupis, 529
U.S. 494, 505 (2000), available at http://supct.law.cornell.edu/supct/html/98-1480.ZS.html
(discussing cause requirement under RICO).
U.S.C. § 1964(c); See De Falco v. Dirie, 923
F. Supp. 473, 476 (S.D.N.Y. 1996) (stating in order to have
standing plaintiff must show causation of injury by violation). The
court found that the conduct that violated RICO directly caused the
injury to the plaintiffs; See also First Nationwide Bank v. Gelt
Funding Corp., 27 F.3d 763 (2d Cir. 1994) (denying RICO claim based
on lack of proximate causation).
See Hecht v. Commerce Clearing House, Inc., 897
F.2d 21, 23 (2d Cir. 1990).
U.S.C. § 1962(c) (2000).
See, Sedima S.P.R.L. v. Imrex Co., Inc., 473
U.S. 479, 496 (1985) (stating RICO § 1964(c) permits private
actions even absent criminal conviction or racketeering injury).
U.S.C. § 1961(4) (2000).
See Procter & Gamble Co. v. Big Apple Indus. Bldgs., Inc., 879
F.2d 10, 15 (2d Cir. 1989).
U.S.C. § 1961(3) (2000).
U.S.C. § 1961(4) (2000); See, e.g., United States v.
F.2d 23, 30-33 (2d Cir. 1981).
See Riverwoods Chappaqua Corp. v. Marine Midland Bank, N.A., 30 F.3d
339, 344 (2d Cir. 1994) (discussing distinctness requirement of
See Discon, Inc. v. NYNEX. Corp., 93
F.3d 1055, 1064 (2d Cir. 1996), rev'd on other grounds, 525
U.S. 128 (1998) (dismissing cause of action under Sherman Act
and RICO for failure to state a claim).
See Cedric Kushner Promotions Ltd. v. King, 533
U.S. 158 (2001) (stating § 1962(c) requires no more than
formal legal distinction between person and enterprise). If a
corporate employee is the only owner of a corporation, the provision
can apply. Id.
Procter & Gamble Co. v. Big Apple Indus. Bldgs., Inc., 879 F.2d
10, 15 (2d Cir. 1989).
De Falco v. Bernas, 244
F.3d 286, 320 (2d Cir. 2001) citing H.J. Inc. v. Northwestern
Bell Tel. Co., 492
U.S. 229, 239-41 (1989).
Hecht v. Commerce Clearing House, Inc., 897
F.2d 21, 25 (2d Cir. 1990) (stating court must base finding of
standing on predicate racketeering act).
U.S.C. §1961(1) (2000) (defining predicate acts for finding of
racketeering). See also Wiwa V. Royal Dutch Petroleum Co., 2002 WL
319887, *22 (S.D.N.Y. 2002) (stating racketeering activity refers to
commission of predicate acts listed in 18 U.S.C. § 1961(1)).
U.S.C. § 1951 (2000); See United States v. Tocco, 306 F.3d
279, 279 (6th Cir. 2002) (stating violations of Hobbs Act
constituted racketeering under RICO).
U.S.C. § 1951 (2000).
See supra note 117 and accompanying text.
United States v. Bagaric, 706
F.2d 42, 62 (2d Cir. 1983) abrogated on other grounds by Nat'l
Org. for Women, Inc. v. Scheidler, 510 U.S. 249(1994).
Bagaric, 706 F.2d at 62 (2d Cir. 1983) (stating state offenses
included by generic designation).
See United States v. Coonan, 938
F.2d 1553, 1564-65 (2d Cir. 1991) (holding defendant not entitled to avoid
results of unsuccessful tactical choice made in allowing admission
of otherwise inadmissible evidence).
Id. at 1564. But see, Peters v. Welsh Development Agency, 1991 WL
172950, * 7 (N.D. Ill. 1991).
See, e.g., United States v. Carrillo, 229
F.3d 177, 186 (2d Cir. 2000). (affirming racketeering
conspiracy to commit racketeering). The court did not require an
overt act in furtherance of conspiracy to support conspiracy
See Coonan, 938 F.3d at 1564 (2d Cir. 1991).
U.S.C. § 1962(c) (2002).
U.S.C. § 1962(d) (2002).
See Salinas v. United States, 522
U.S. 52, 65 (1997) (stating no "overt act" required for RICO
United States v. Zichettello, 208
F.3d 72, 100 (2d Cir. 2000) (stating
government not required to prove RICO defendant had actual knowledge
of all criminal acts of conspirators in furtherance of conspiracy).
This case involved an appeal from convictions and sentences in a
multi-defendant, RICO conspiracy case. Id.
See De Falco v. Bernas, 244
F.3d 286, 330 (2d Cir. 2001) (granting in part appeal against
excessive damages awarded in RICO conviction).
Central Bank of Denver, N.A. v. First Interstate Bank of Denver,
U.S. 164, 165-66 (1994).
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