Cedric Kushner Promotions, Ltd. v. King

PETITIONER: Cedric Kushner Promotions, Ltd.
RESPONDENT: King
LOCATION: Rhode Island General Assembly

DOCKET NO.: 00-549
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 533 US 158 (2001)
ARGUED: Apr 18, 2001
DECIDED: Jun 11, 2001

ADVOCATES:
Austin C. Schlick - Department of Justice, for United States, as amicus curiae, supporting petitioner
Peter Fleming, Jr. - Argued the cause for the respondents
Richard A. Edlin - Argued the cause for the petitioner

Facts of the case

Cedric Kushner Promotions, Ltd., a corporate promoter of boxing matches, sued Don King, the president and sole shareholder of a rival corporation, alleging that King had conducted his corporation's affairs in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). RICO makes it "unlawful for any person employed by or associated with any enterprise...to conduct or participate...in the conduct of such enterprise's affairs through a pattern of racketeering activity." The District Court dismissed the complaint. In affirming, the Court of Appeals held that RICO applies only where a plaintiff shows the existence of two separate entities, a "person" and a distinct "enterprise," the affairs of which that "person" improperly conducts. The court concluded that King was part of the corporation, not a "person," distinct from the "enterprise," who allegedly improperly conducted the "enterprise's affairs."

Question

Are Don King and his corporation a distinct "person" and "enterprise," such that RICO applies?

Media for Cedric Kushner Promotions, Ltd. v. King

Audio Transcription for Oral Argument - April 18, 2001 in Cedric Kushner Promotions, Ltd. v. King

Audio Transcription for Opinion Announcement - June 11, 2001 in Cedric Kushner Promotions, Ltd. v. King

Stephen G. Breyer:

Now the second case, Kushner Promotions v. King, involves RICO, the Racketeer Influenced and Corrupt Organizations Act.

Now, this provision here makes it “unlawful for a person” who is employed, by or and associated with an “enterprise” to use the enterprise to commit what RICO calls a pattern of racketeering activity.

In this case, one boxing promoter, Cedric Kushner Promotions sued a different boxing promoter, Don King claiming that King was the person who used an enterprise namely his company called Don King Productions to engage in a pattern of racketeering activity.

Without deciding whether the allegations were true or not true, the lower court dismissed the complaint because King as President and sole shareholder of Don King Productions was not in its view separate enough from the corporation which was the enterprise.

It pointed out that lower courts have required that there would be some distinctness between the person and the enterprise when a plaintiff brings an action under this provision of RICO.

Now, in this case we consequently have to decide two questions: one, whether this RICO provision does require two separate entities, a person and a distinct enterprise, and two, if so, whether there is enough distinctness in this case given the closed relationship between Don King and his enterprise Don King Productions.

The lower courts held that there was a distinctness requirement.

We agree with that, in fact, every Appellate Court that has considered this question, agrees with that.

We explain it some length in our opinion that both the language of the provision and its basic purpose support our interpretation.

The harder question is whether the RICO enterprise and RICO person are here distinct.

We find contrary to what the Court of Appeals held but they are sufficiently distinct.

As we have noted, King is the President and sole shareholder of Don King Productions.

The plaintiff says that while working as the president of that company, he engaged in the unlawful pattern.

The Court of Appeals focused on the fact that the allegations related to actions taken by King were within the scope of his corporate employment.

In this situation, according to that court, the employee and the employer are essentially the same not distinct.

We disagree.

In law of course, a corporate owner, a corporate employee; a natural person is distinct from the corporation itself which is a legally different entity with different rights and responsibilities.

We can find nothing in the statute that requires any more separateness than that.

Linguistically speaking an employee like King who conducts the affairs of the corporation through illegal acts comes within the terms of the statute that forbids any person unlawfully to conduct an enterprise particularly given the acts expensive definitions of person and enterprise.

We also find that the application of RICO in these circumstances is perfectly consistent with the statute’s basic purposes as we have previously defined them namely preventing the victimization of legitimate organizations and protecting the public from persons who would use an enterprise as a vehicle for unlawful activity.

The Court of Appeals formulation we fear would contravene statute’s basic purposes.

We therefore reverse and remand for further proceedings.

Our decision is unanimous.