In the last decade, tribal entities and officials have increasingly become the subjects of civil suits alleging violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962 et seq. When originally proposed, RICO was described as “an act designed to prevent ‘known mobsters’ from infiltrating legitimate businesses.”[1] “RICO was intended to combat organized crime, not to provide a federal cause of action and treble damages to every tort plaintiff.”[2] Despite its original intent, however, RICO is now too often used to transform an otherwise garden-variety tort claim into a frivolous headline-grabbing lawsuit, presumably with the hope that it will scare the defendants into a hasty settlement agreement.
Most recently, the Tribal Council of the Cheyenne and Arapaho Tribes of Oklahoma, along with a handful of individually named tribal members filed a RICO suit against the tribe’s governor, former tribal officials, several nontribal members and two law firms.[3] The complaint alleges that the defendants “took control of the Tribal government and gaming enterprises” and that “[t]hrough a concerted and systematic program of fraud, coercion, intimidation, extortion, bribery, and deception, these individuals stole and otherwise diverted hundreds of millions of dollars in Tribal money for their own personal benefit, as well as for those who substantially assisted them in this scheme.”[4] Although these allegations may seem fantastic and better-suited for a movie script, these are the types of claims underlying many tribal RICO suits.
There are a few potential reasons that tribal RICO lawsuits have increased. As the epicenters of gaming, tribal casinos offer a convenient setting for far-fetched narratives of racketeering conspiracies, which, even if false, may initially seem compelling enough to be both distressing to the defendants and intriguing to the media. RICO plaintiffs come from a variety of sources, including disgruntled patrons, unsuccessful competitors and tribal members embroiled in a political dispute.[5] Additionally, the breadth of the definition of “racketeering activity” under the statute — which includes both violent crimes of murder, robbery,\ and kidnapping and lesser crimes of gambling, bribery and mail fraud — makes filing a RICO complaint relatively easy.[6]
But a party accused of RICO need not immediately acquiesce to an unreasonable settlement demand simply out of fear of litigating an alleged violation. Although a frivolous RICO claim cannot necessarily be prevented, the following tips and strategies are intended to help to make navigating such a claim more manageable.
Assert All Forms of Immunity
A tribal entity’s or official’s first line of defense should be an exhaustive review of its potential immunity defenses. For tribes or their economic entities such as casinos, sovereign immunity may provide the necessary basis for dismissal.[7] Another immunity defense to consider, where applicable, is judicial immunity, which widely insulates judges and others who perform judicial functions from civil liability from their judicial acts, even when done maliciously or corruptly.[8] When defending individual tribal employees or officials, it is important to remember that the U.S. Supreme Court recently held that a tribe’s sovereign immunity is not implicated where a suit is brought against a tribal employee in his or her individual capacity for a tort committed within the scope of his or her employment.[9] Thus, employees or officials sued for RICO who fall into those circumstances are unlikely to succeed on a sovereign immunity defense.[10]
Scrutinize the Pleadings
Second, counsel must closely review the complaint to ensure both compliance with the heightened pleading standards of FRCP 9(b), and sufficiency of the pleadings under FRCP 12(b)(6). To establish a RICO violation, a defendant must have participated in (1) the conduct of (2) an enterprise that affects interstate commerce (3) through a pattern (4) of racketeering activity or collection of unlawful debt.[11] To satisfy the “pattern of racketeering” requirement, the plaintiff must allege not only that defendants had committed two or more predicate acts, but also that predicates themselves amount to, or that they otherwise constitute threat of, continuing racketeering activity.[12] Failure to adequately plead under either rule is adequate grounds for dismissal.[13]
Under Rule 9(b), a party alleging fraud or mistake “must state with particularity the circumstances constituting fraud or mistake.” This heightened pleading requirement applies to fraud-based predicate...
