Donald Saucier v. Elliot M. Katz and in Defense of Animals
The Court ruled that a boxing promoter could sue rival promoter Don King under the federal anti-racketeering law even though King was the president and sole owner of the corporation he allegedly used to commit fraud, because a person and the corporation he owns and works for are still legally separate entities.
The decision resolves a split among federal appeals courts over whether business owners who run their own closely-held companies can be treated as separate from those companies for purposes of racketeering lawsuits, opening the door to more RICO claims against owner-operators.
“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's core reasoning for why an owner and his corporation count as separate legal persons.
How it got here: A federal trial court dismissed the suit following Second Circuit precedent; the Second Circuit affirmed, and the Supreme Court agreed to hear the case to resolve a circuit split.
The Case in Depth
What happened
Cedric Kushner Promotions, a boxing-match promotion company, sued Don King, who is both president and sole shareholder of a rival boxing promotion corporation, Don King Productions. Kushner claimed King had run his corporation's boxing business through repeated acts of fraud and other crimes covered by the federal anti-racketeering law, even though it was undisputed that King acted within his normal authority as the company's top executive.
The question before the Court
If a company's president and sole owner runs the company's business through fraud, can he be sued under the anti-racketeering law for improperly running his own company?
Why it matters
Owners of closely-held corporations can now be sued personally under the federal racketeering law for how they run their own companies, even when they act within the normal scope of their job. This gives business rivals, employees, and other plaintiffs a broader tool to bring civil RICO claims against small-business owners and executives who also happen to own their companies outright.
What changes now
The case goes back to the lower courts, where Kushner Promotions' racketeering claims against Don King can now proceed past the dismissal stage. The ruling does not decide whether King actually violated the law — only that the legal theory itself is valid. Future civil racketeering suits against sole owners of closely-held companies can now rely on this ruling to survive early dismissal.
What this does not decide
The Court decided only that a sole owner-employee is legally distinct enough from his corporation to be sued under this provision; it did not decide whether King actually committed fraud or violated the racketeering law, nor whether corporations can be held liable for their employees' criminal acts.
How the Court got there
The legal reasoning, step by step
- The anti-racketeering law being applied, RICO, makes it illegal for a 'person' to conduct the affairs of an 'enterprise' through a pattern of crimes; the Court accepted the basic rule that a plaintiff must show two genuinely separate things — a person and an enterprise that isn't just the same person under another name.
- The Court found nothing in the statute requiring more separation than the ordinary legal distinction that incorporation creates: a corporation is always a distinct legal entity from the people who own, run, or work for it, regardless of how much authority those individuals hold.
- Applying that principle, the Court reasoned that a company president who is also the sole owner is still, linguistically and legally, a different 'person' from the corporation itself, since the statute defines 'person' to include any individual and 'enterprise' to include a corporation.
- The Court rejected the lower appeals court's rule that an owner acting within the normal scope of his authority should be treated as part of the corporation rather than separate from it, because that rule would shield many of the very people the law was designed to reach, including leaders of criminal enterprises acting within their own authority.
- The Court also found this reading consistent with the law's purposes of protecting legitimate businesses from being misused for crime and protecting the public from enterprises used as vehicles for unlawful activity, concluding that the formal legal distinction created by incorporation is enough to satisfy the statute's separateness requirement.
Doctrinal impact
Cases affected by this decision
Distinguishes Riverwoods Chappaqua Corp. v. Marine Midland Bank (30 F.3d 339)
The Court said this earlier Second Circuit case involved a corporation and its employees together, unlike this case.