Syllabus | Opinion [ Breyer ] |
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The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337.
CEDRIC KUSHNER PROMOTIONS, LTD. v. KING et al.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
Petitioner, a corporate promoter of boxing matches, sued Don King, the president and sole shareholder of a rival corporation, alleging that King had conducted his corporations affairs in violation of the Racketeer Influenced and Corrupt Organizations Act, which makes it unlawful for any person employed by or associated with any enterprise to conduct or participate in the conduct of such enterprises affairs through a pattern of racketeering activity, 18 U.S.C. § 1962(c). The District Court, citing Circuit precedent, dismissed the complaint. In affirming, the Second Circuit expressed its view that §1962(c) 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. In this instance, the court noted, it was undisputed that King was an employee of his corporation and also acting within the scope of his authority. Under the courts analysis, King, in a legal sense, was part of the corporation, not a person, distinct from the enterprise, who allegedly improperly conducted the enterprises affairs.
Held: In the circumstances of this case, §1962(c) requires no more than the formal legal distinction between person and enterprise (namely, incorporation); hence, the provision applies when a corporate employee unlawfully conducts the affairs of the corporation of which he is the sole ownerwhether he conducts those affairs within the scope, or beyond the scope, of corporate authority. This Court does not quarrel with the basic principle that to establish liability under §1962(c) one must allege and prove the existence of two distinct entities: (1) a person; and (2) an enterprise that is not simply the same person referred to by a different name. Nonetheless, the Court disagrees with the appellate courts application of that distinctness principle to the present circumstances, in which a corporate employee, acting within the scope of his authority, allegedly conducts the corporations affairs in a RICO-forbidden way. The corporate owner/employee, a natural person, is distinct from the corporation itself, a legally different entity with different rights and responsibilities due to its different legal status. The Court can find nothing in RICO that requires more separateness than that. Linguistically speaking, an employee who conducts his corporations affairs through illegal acts comes within §1962(c)s terms forbidding any person unlawfully to conduct an enterprise, particularly when RICO explicitly defines person to include any individual capable of holding a legal or beneficial interest in property, and defines enterprise to include a corporation, §§1961(3), (4). And, linguistically speaking, the employee and the corporation are different persons, even where the employee is the corporations sole owner. Incorporations basic purpose is to create a legal entity distinct from those natural individuals who created the corporation, who own it, or whom it employs. See, e.g., United States v. Bestfoods, 524 U.S. 51, 6162. The precedent on which the Second Circuit relied involved significantly different circumstances from those here at issue. Further, to apply RICO in these circumstances is consistent with the statutes basic purposes of protecting both a legitimate enterprise from those who would use unlawful acts to victimize it, United States v. Turkette, 452 U.S. 576, 591, and the public from those who would unlawfully use an enterprise (whether legitimate or illegitimate) as a vehicle through which unlawful activity is committed, National Organization for Women, Inc. v. Scheidler, 510 U.S. 249, 259. Conversely, the appellate courts critical legal distinctionbetween employees acting within and without the scope of corporate authoritywould immunize from RICO liability many of those at whom this Court has said RICO directly aims, e.g., high-ranking individuals in an illegitimate criminal enterprise, who, seeking to further the enterprises purposes, act within the scope of their authority, cf. Turkette, supra, at 581. Finally, nothing in the statutes history significantly favors an alternative interpretation. This Courts rule is no less consistent than is the lower courts rule with the following principles cited by King: (1) the principle that a corporation acts only through its directors, officers, and agents; (2) the principle that a corporation should not be liable for its employees criminal acts where Congress so intends; and (3) antitrust laws intracorporate conspiracy doctrine. Pp. 28.
219 F.3d 115, reversed and remanded.
Breyer, J., delivered the opinion for a unanimous Court.