Donald Saucier v. Elliot M. Katz and in Defense of Animals
Headline: RICO can be used against a corporate owner who unlawfully runs his company, upholding that incorporation’s legal separation lets plaintiffs sue sole-owner executives even when they act within corporate authority.
Holding: In the circumstances presented, 18 U.S.C. 1962(c) applies when a natural person who is a corporation’s owner and employee unlawfully conducts the corporation’s affairs, and incorporation’s legal separation suffices to show distinctness.
- Allows RICO suits against owner-executives who allegedly run companies unlawfully.
- Permits plaintiffs to proceed despite executives acting within corporate authority.
- Resolves conflicting appeals-court rules about owner-employee separateness under RICO.
Summary
Background
A boxing-promotions company sued Don King, the president and sole shareholder of a rival corporation, claiming he used the corporation to carry out a pattern of fraud and other crimes under RICO. The District Court dismissed the complaint, and the Second Circuit affirmed, concluding that because King was an employee acting within his authority he was not legally distinct from the corporation.
Reasoning
The Court addressed whether the statute requires more than the basic legal distinction created by incorporation for a "person" to be separate from an "enterprise." The Justices held that a natural person who is a corporation's owner and employee is legally distinct from the corporation itself. The Court found nothing in the statute that demands any greater separateness and rejected the idea that acting within corporate authority bars RICO liability. As a result, the Court reversed the Second Circuit and sent the case back for further proceedings consistent with this view.
Real world impact
The ruling lets plaintiffs pursue RICO claims against corporate executives who are also owners when those individuals allegedly run the company through unlawful acts. It resolves a split among federal appeals courts about when an owner-employee can be treated as a separate "person" under RICO. This decision is not a final finding on the facts; the case was remanded so the lower courts can proceed in light of the Court's legal rule.
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