Antitrust Law Daily Wrap Up, RICO—Fed. Cir.: RICO’s ‘civil remedies’ provision did not create implied contract with private citizens, (Aug 8, 2016)

By Mark Engstrom, J.D.

The U.S. Court of Federal Claims did not err in dismissing a RICO claim that two individuals had asserted against the United States government, the U.S. Court of Appeals for the Federal Circuit has ruled. The individuals unsuccessfully argued that the government had breached its "implied contract" with private citizens, under the civil remedies provision of the RICO statute, when the U.S. District Court for the Western District of Virginia dismissed their RICO claim against the U.S. Department of Agriculture and other defendants. Because the Court of Federal Claims lacked jurisdiction to review the decisions of the Western District of Virginia, and because the plaintiffs failed to state a valid claim against the U.S. government, the decision of the Court of Federal Claims was affirmed (Julian v. U.S., August 4, 2016, per curiam).

Lawsuit. Plaintiffs Christopher and Renee Julian sued the U.S. government in the Court of Federal Claims. According to the plaintiffs, the government offered an "implied contract" to private citizens under RICO §1964(c), which allowed individuals to serve as "private attorneys general" and to sue for damages if they suffered an injury to their business or property as the result of a RICO violation. The plaintiffs allegedly "accepted" the government’s contract offer when they filed a complaint in the Western District of Virginia, and the government allegedly breached its implied contract, under RICO, when the district court dismissed their claims.

In the alternative, the plaintiffs alleged that the district court’s dismissal violated the Takings Clause of the Fifth Amendment when the Western District of Virginia dismissed an earlier action that the plaintiffs had filed under the civil remedies provision of RICO, 18 U.S.C. §1964(c). The Court of Federal Claims dismissed the plaintiffs’ complaint for lack of jurisdiction and for failing to state a valid claim for relief. The plaintiffs appealed.

Jurisdiction. The Federal Circuit ruled that the Court of Federal Claims had properly found that jurisdiction over the plaintiffs’ claims was lacking. Although the plaintiffs’ claims were styled as breach of contract and takings claims, the claims were actually requests to review the decision of a federal district court, and the Court of Federal Claims lacked jurisdiction to conduct that review. Further, to the extent that the plaintiffs argued that RICO was a money-mandating statute that conferred jurisdiction on the Court of Federal Claims, the Federal Circuit disagreed.

Implied contract. The plaintiffs’ characterization of RICO §1964(c) as a "contract offer" was simply false, the Federal Circuit ruled, because federal laws were presumptively non-contractual absent a clear indication that the legislature had intended to bind itself contractually, and because nothing in the text of RICO indicated that the statute’s civil remedies provision was intended to function as a contract offer to private citizens. The plaintiffs thus failed to show that the RICO statute created a contract between the plaintiffs and the government, according to the court.

Takings clause of Fifth Amendment. The plaintiffs failed to allege an unlawful taking under the Fifth Amendment, the court decided. According to the plaintiffs, their RICO claim in the Western District of Virginia was a property right that was unlawfully taken by the U.S. government when the district court dismissed that claim. However, the Federal Circuit had already held that the frustration of a legal claim—like the plaintiffs’ RICO claim—was not a compensable taking.

The case is No. 2016-1889.

Attorneys: Melissa Baker, U.S. Department of Justice, for the United States.

Cases: RICO FedCirNews