Wednesday, September 26, 2012

Civil Rico Litigation and BP Common Pleading Errors and How BP Can Win the Law Suit

While the recent news doesn't bode well for BP's litigation defense efforts, a plaintiff's lawyer suing BP still has no guarantee of success. In a recent WSJ Law Blog, Oil Spill Lawyers Competing Against BP . . . and With the Government the author points to some of the risks involved with plaintiff's work. For instance, plaintiff's lawyers always take a risk that their expert will blow the case. But, this isn't a post on handling your expert witness (that issue will likely be addressed in a trial advocacy post in the future.) Instead, I will take a look at another issue a plaintiff's attorney needs to be aware of in his/her civil RICO claim.

As I mentioned in my previous posting on this issue, Civil RICO Litigation and BP: Because You Were Wondering the first big hurdle plaintiff's attorney's will be faced with deals with the complaint itself. There will likely be an amended complaint at some point in the near future (perhaps even two or three).

If you have read the complaint, and aren't a seasoned litigator, or if you don't normally handle issues that need to be plead with particularity (Fed. R. Civ. P. 9(b)) than you may be unaccustomed to the pitfalls in which a plaintiff's lawyer may fall. In my own experience, and from my own observations, one of the greatest problems with these kind complaints is whether the language of the complaint connects the allegations to civil RICO.

For instance, it is very tempting to plaintiff's attorneys to say something like "defendant committed fraud" The judge knows the plaintiff is claiming the defendant committed fraud. Saying that over and over in a pleading doesn't make it a proper pleading. Yet that is exactly what many lawyers try to do.

Instead, one should be ready to answer questions like how exactly was the fraud committed? Who committed the fraud? Why was the fraud committed? It need not be sensational. But it does need to create a link to the defendant and the actionable transactions under RICO.

A common tactic plaintiff's use in defending an incomplete initial complaint is to state that specifics will be obtained during discovery. Well, you may be able to get away with that sometimes. However, that answer is much a much easier sell when the pleading doesn't require much beyond a short plain statement.

On the other hand, RICO requires an engagement in a "pattern of racketeering activity" 18 U.S.C. 1962. And, the determination as to whether a pattern exists, is commonly made in favor of the defendant on a 12(b)(6). One of the reasons for this is that attorneys seem to be fond of replacing a tort or several tortious acts for RICO.

To be successful under a RICO claim, more than one transaction is required. Often, however, the pleading will lead the court to determine that the acts complained of consist of only one transaction. 1 One of the troubling issues for plaintiff's attorneys in their pleadings, (or even if they make it past that stage) is the pattern issue.

How can plaintiff's attorneys show a pattern? "[T]o prove a pattern of racketeering activity a plaintiff must show that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity." 47 F.3d 1280. (For the sake of brevity here I am only including cites).

The first trouble is of course the relatedness aspect of this test. "[P]redicate acts are related if they "have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.'" Id.

Attorneys who do get past the issue of "related acts" still haven't made it past the Court's test. In addition, the Court requires continuity. "The continuity requirement is likewise satisfied where it is shown that the predicates are a regular way of conducting defendant's ongoing legitimate business (in the sense that it is not a business that exists for criminal purposes), or of conducting or participating in an ongoing and legitimate RICO "enterprise." Id.

The plaintiff's, therefore in the BP civil RICO suits, will likely seize upon the first of the two options for continuity. They will likely focus on the facts that show that BP conducts its ongoing business in way that amounts to a threat of continuing or ongoing criminal activity.

Despite the publicity and the size and scope of the oil leak, BP will likely try to prove that the oil leak is the result of a single tort for which a fund has already been created and for which their civil liability is diminished.2 Granted the single tort may be the result of several acts of negligence. However, a bunch of negligence doesn't a civil RICO claim make!

In other words, just because BP is careless doesn't mean they are racketeers.

The above analysis doesn't purport to suggest that BP cannot be found liable under civil RICO. The point is simply to make people aware of the some of the lesser known issues involved. RICO is a complex creature; it has the ability to keep attorneys quiet and busy for long periods of time.

1. 852 F.2d 936; for an interesting discussion of the "pattern" take a look at 492 U.S. 229

2. I direct you to the WSJ Law Blog article at the top

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