Antitrust Law Daily Wrap Up, RICO—E.D. La.: Reliance on FBI counsel’s advice insufficient to toll statute of limitations, (Mar 16, 2015)

By Jody Coultas, J.D.

Racketeer Influenced and Corrupt Organizations Act (RICO) and Louisiana Racketeering Act claims against a contractor involved in the clean-up after Hurricane Katrina were barred by the applicable statute of limitations, according to the federal district court in New Orleans (Farmer v. D&O Contractors, Inc., March 13, 2015, Africk, L.).

Debris-removal subcontractors who worked in the aftermath of the hurricane alleged that D&O Contractors, Inc. demanded “protection money” and wrongfully diverted payments for work that the subcontractors performed. One of the subcontractors operated as an FBI informant during its investigation into defendants’ alleged activity, but no indictments were issued.

Statute of limitations. The subcontractors’ claims were time barred, according to the court. Civil RICO claims have a four-year statute of limitations, and begin to accrue when the plaintiff discovers, or should have discovered, the injury. The Louisiana Racketeering Act is subject to a five-year prescriptive period. The subcontractors alleged the extortion scam began in the spring of 2006. All of the claims prescribed in June 2010 and June 2011, but the original complaint was not filed until July 30, 2012.

Equitable tolling. The doctrine of equitable tolling did not apply to this case, according to the court. Equitable tolling applies where the plaintiff is actively misled by the defendant about the cause of action or is prevented in some other extraordinary way from asserting his rights. Although one of the subcontractors assisted the FBI with an investigation into the defendants’ allegedly illegal activity, he also failed to act diligently to protect his civil claims. The subcontractor failed to offer a reason for failing to consult counsel. A garden variety claim of excusable neglect does not support equitable tolling. Because the subcontractors did not diligently pursue their rights, and were not hindered by extraordinary circumstances from bringing their claims, the equitable tolling doctrine did not apply.

Sanctions. The court declined to find that the subcontractors’ counsel breached his Rule 11 obligations and found that no award of sanctions was warranted.

The case is No. 14-1945.

Attorneys: Hiram C. Eastland, Jr. (Eastland Law Offices, PLLC) for Stephen P. Farmer, Farmer Enterprises, Inc., Cross Country Recycling, LLC, and Truck & Equipment Enterprises. R. David Kaufman (Brunini, Grantham, Grower & Hewes, PLLC) for D&O Contractors, Inc.

Companies: Farmer Enterprises, Inc.; Cross Country Recycling, LLC; Truck & Equipment Enterprises; D&O Contractors, Inc.

Cases: RICO LouisianaNews