Antitrust Law Daily Wrap Up, RICO—9th Cir.: California Student Aid Commission immune from racketeering claims, (Jan 6, 2016)

By Greg Hammond, J.D.

The federal district court in San Diego did not err in dismissing Racketeer Influenced and Corrupt Organization Act (RICO) claims against the California Student Aid Commission (CSAC), the U.S. Court of Appeals in San Francisco has decided. Affirming the lower court’s decision, the appellate court concluded that CSAC is immune from private lawsuits in federal courts, Congress has not abrogated state immunity under RICO, and CSAC never waived state action immunity (Banks v. ACS Education, January 4, 2016, Per Curiam).

A consumer filed suit against CSAC and others, alleging the defendants violated RICO, the Fair Debt Collection Practices Act, and the Fair Credit Reporting Act by conspiring to negatively report information about the consumer’s student loans and consumer credit accounts. The consumer appealed the lower court’s order dismissing the third amended complaint with prejudice.

State action immunity. Finding that the trial court did not err in dismissing the claims against CSAC on Eleventh Amendment grounds, the appellate court affirmed the lower court’s decision. CSAC was immune from private lawsuits in federal court, according to the appellate court, unless Congress clearly abrogated immunity or CSAC otherwise waived immunity. Congress, however, did not abrogated state immunity under RICO, and CSAC did not waive immunity.

Lack of pattern of racketeering activity. The court additionally found dismissal appropriate because the alleged Fair Debt Collection Practices Act and Fair Credit Reporting Act violations are not within the enumerated predicate acts that may amount to a “pattern of racketeering activity.” The RICO claim therefore failed as a matter of law, the court concluded.

Lastly, because the consumer had multiple opportunities to amend his complaint and failed to add any factual allegations to cure deficiencies identified by the trial court, the appellate court determined that the lower court did not abuse its discretion by dismissing the third amended complaint with prejudice.

The case is No. 13-56819.

Attorneys: Alfred Banks, pro se. Bryce Clark Besser (Brown Law Group) for ACS Education. June D. Coleman (Kronick Moskovitz Tiedemann & Girard PC) for Coast Professional Inc. Lisa Gilford (Skadden, Arps, Slate, Meagher & Flom LLP) for JP Morgan.

Companies: ACS Education; Coast Professional Inc.; JP Morgan

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