Antitrust Law Daily Wrap Up, RICO—E.D. Pa.: Charging usurious rates, repossessing collateral violated RICO; treble damages warranted, (Aug 3, 2016)

By Mark Engstrom, J.D.

An individual was entitled to a default judgment, treble damages, and attorney fees and costs against three individuals who had charged usurious rates for her vehicle loan, and against two individuals who had repossessed her truck for non-payment, the federal district court in Philadelphia has ruled (Bynon v. Mansfield, August 1, 2016, Pappert, G.).

The plaintiff alleged that all five defendants had violated RICO by repossessing her car to collect an unlawful debt. The court noted that the defendants had charged the plaintiff an annual interest rate of 182.02 percent, which was well above the legal limit of Pennsylvania’s Loan Interest and Protection Law.

According to the court, the plaintiff pleaded sufficient facts to state a viable RICO claim against the defendants. More specifically, she sufficiently alleged that: (1) the defendants were "persons" under the statutory definition; (2) each entity constituted a RICO enterprise; (3) the defendants were employed or associated with a RICO enterprise; (4) the enterprises were engaged in interstate commerce; and (5) the defendants had conducted the affairs of the enterprises or had participated in the affairs of the enterprises through the collection of unlawful debt. In addition, the plaintiff pleaded sufficient facts to show that the defendants had conspired to violate RICO §1962(c) in violation of §1962(d).

Default judgment. The court noted that three factors controlled whether a default judgment would be granted: (1) prejudice to the plaintiff if a default was denied; (2) whether the defendant appeared to have a litigable defense; and (3) whether the defendant’s delay was due to culpable conduct. The court concluded that that each of those factors favored a default judgment. According to the court, the plaintiff would be prejudiced absent a default judgment because the plaintiff had no other means of vindicating her claims against the defendants. Further, the court could presume that an absent defendant who failed to answer had no meritorious defense because the court was not responsible for researching the law and constructing the parties’ arguments for them. Finally, the defendants’ failure to engage in the litigation process constituted "culpable conduct" with respect a default judgment. Concluding otherwise would reward the recalcitrant or the "oppositional and uncooperative," the court explained.

Damages. Because the plaintiff pleaded sufficient facts and proffered sufficient evidence of a RICO violation, the court approved damages in the amount of $41,086.98—treble the amount of actual damages that the plaintiff had submitted.

Attorney fees. The court found that an hourly rate of $275 was reasonable for the plaintiff’s counsel, who had been practicing law for 27 years. According to the court, that rate was lower than the rates that were charged by other attorneys with comparable experience. The court also found that the amount of time that the attorney had spent on the plaintiff’s case was reasonable. Legal fees and costs in the amount of $11,462 were therefore reasonable.

The case is Civil Action No. 15-00206.

Attorneys: Robert F. Salvin (Phila Debt Clinic & Consumer Law Center) for Breanda Taylor Bynon. Justin Gray (Rosette LLP) and John Michael Willis (Three Penn Center) for Craig Mansfield.

Cases: RICO PennsylvaniaNews