Singer v. American Psychological Association No. 92 CIV. 6082 (1993)
United States District Court, S.D. New York.
Margaret SINGER and Richard Ofshe, Plaintiffs,
AMERICAN PSYCHOLOGICAL ASSOCIATION, American Sociological Association, Raymond Fowler, Leonard Goodstein, Bonnie Strickland, Joan Huber, William D'Antonio, Henry Newton Malony, Jr., Donald Bersoff, Bruce J. Ennis, Ennis, Friedman & Bersoff, Donald B. Verilli, Jr., Jenner & Block, Dick Anthony, James Richardson, Rodney Stark, and Beverly London, the anticipated Co-Executrix of the Estate of Perry London, Defendants.
No. 92 CIV. 6082 (LMM).
Aug. 9, 1993.
MEMORANDUM AND ORDER
- McKENNA, District Judge.
By this Order, the Court decides the parties' motions now pending before it. Plaintiff moves for default judgment against defendant Rodney Stark pursuant to Rule 10 of the Civil Rules for the Southern District of New York. Defendants American Psychological Association ("APA"), American Sociological Association ("ASA"), Raymond Fowler, Leonard Goodstein, Bonnie Strickland, Joan Huber, William D'Antonio, Henry Newton Malony, Jr., Donald Bersoff, Bruce J. Ennis, Ennis, Friedman & Bersoff, Donald B. Verilli, Jr., Jenner & Block, Dick Anthony, James Richardson, and the Estate of Perry London jointly move to dismiss the Complaint pursuant to Fed.R.Civ.P. 12(b)(6) and 9(b). Defendants James Richardson, Dick Anthony and Rodney Stark join in the motion to dismiss, adding their own grounds for dismissal relevant to them.
The Court declines to enter default judgment against defendant Rodney Stark. The action was commenced on August 11, 1992, and service of process was attempted on August 20, 1992; however, personal service on Stark was not effected until December 5, 1992. (Flomenaft Aff. for Judgment by Default, ¶ 5.) Defendant Stark was aware of the lawsuit prior to being served himself; he was also aware that a joint motion to dismiss had been filed by the other defendants. The tardiness of service upon him and the fact that he had not previously been party to litigation contributed to his mistake that he was "covered" by the joint motion to dismiss and that he need not respond individually. (Lieberman Aff. ¶¶ 5-6.) Upon receiving plaintiff's motion seeking entry of default judgment, he promptly consulted an attorney, realizing that he might need to respond individually. As the standard to relieve a party of a default under Fed.R.Civ.P. 55(c), expressed in Meehan v. Snow, 652 F.2d 274, 277 (2d Cir.1981), evidences, the circumstances of this case clearly do not warrant entry of a default judgment against defendant Stark.
The factors bearing on this determination are: whether the default was willful, whether setting it aside would prejudice the adversary, and whether a meritorious defense is presented. Id. Plaintiff has shown no prejudice. Defendant Stark has at all times intended to join in the other defendants' motion to dismiss, the arguments of which, as discussed herein, clearly constitute meritorious defenses. Moreover, Stark's failure to respond was not willful. As the Court of Appeals in Meehan noted, "[d]efaults are not favored, particularly when the case presents issues of fact, and doubts are to be resolved in favor of a trial on the merits." Id. (citations omitted). Where the claims underlying an action are legally dubious, there is, in this Court's view, all the more reason to avoid the possible injustice of entering a default judgment against one of the several defendants without examining the legal soundness of the claims raised.
The Court now turns to the facts as alleged in the Amended Complaint before determining whether plaintiffs' claims survive defendants' motion to dismiss. Plaintiffs allege violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961--1968 ("RICO") and pendent causes of action, specifically, civil conspiracy, aiding and abetting, fraud, negligence, and defamation on the part of defendant Anthony. The Amended Complaint states that plaintiff Singer, a highly respected clinical and academic psychologist, formerly an adjunct professor at the University of California, Berkeley and plaintiff Ofshe, a Pulitzer Prize winning social psychologist and sociologist, both derive substantial portions of their income from serving as consultants and expert witnesses in litigation concerned with coercive persuasion, the phenomenon by which certain groups, particularly cults, coerce and exert psychological influence upon their recruits, resulting in psychological injuries, and sometimes causing these recruits to behave in ways contrary to their initial intentions. (Am.Compl. ¶¶ 1, 10-13.)
The defendants are the APA, a not-for-profit professional organization for psychologists, of which both plaintiffs are members; the ASA, a not-for-profit professional organization for sociologists, of which plaintiff Ofshe is a member; defendants Fowler, Goodstein and Strickland, present or former officers of the APA; defendant D'Antonio, former executive officer of the ASA; defendant Huber, former president of the ASA; several academics in the fields of psychology and sociology, specifically, defendants Malony, Stark, Anthony, and Richardson, and defendant Beverly London as Co-Executrix of the Estate of Perry London; the law firm of Jenner and Block; the former law firm of Ennis, Friedman & Bersoff; and several attorneys associated with those two firms, defendants Ennis, Bersoff, and Verilli. All of these defendants were allegedly involved in a conspiracy involving criminal, racketeering and tortious actions in an effort to discredit plaintiffs so as to prevent them or impair them from functioning as respected professionals and expert witnesses in civil and criminal litigations in which their expertise is relevant. (Id. at ¶ 2.) Defendants' motivations allegedly derive from their desires to protect from civil liability the Unification Church, "recklessly run so-called new religions, and commercial Large Group Awareness Trainings." (Id. at ¶ 3.) None of these organizations is a defendant nor does the Amended Complaint allege a connection between the majority of the defendants and the organizations. (Def.Mem. in Support, at 8.)
Several defendants, Malony, Anthony, Richardson, Stark and London, allegedly used the conspiracy as a means for financial gain. (Am.Compl. ¶ 4.) Over a seven year period, defendants allegedly conspired to attempt to obstruct justice in several court proceedings by improperly influencing those proceedings, obstructing justice, deceiving judges, committing wire, mail and common law fraud, acting negligently, and defaming plaintiffs so as to foreseeably injure them. (Id. at ¶ 5.)
The conspiracy consists of several phases, allegedly interconnected in certain respects. Actions of defendant Malony constitute the first phase. Malony allegedly conducted an illegal and defamatory campaign to malign plaintiff Singer beginning in June 1985. Specifically, in connection with the Witness Lee v. Neil T. Duddy, No. 540-585-9 (Sup.Ct., Alameda City, Calif.), and Wollersheim v. Church of Scientology of California, No. C.232 027 (Sup.Ct., L.A. County, Calif.), actions in which both had been retained as forensic experts on opposite sides, Malony wrote several letters aimed at Singer's termination as an expert witness in the litigation. In one he described her as a "militant anti-religionist." Subsequently in June 1986, Malony allegedly attempted to extort Singer in violation of California Penal Code § 136.1 and, by repeated mail frauds, threatened Singer that if she did not recant her testimony and withdraw as a witness for the defendant in Witness Lee and Wollersheim, Malony would prosecute ethics charges against her with the APA. (Id. at 47-65.) After he filed such charges, the APA rejected Malony's ethics complaint. (Am.Compl. ¶ 101.)
In the second phase, Malony allegedly drew defendants Richardson and Anthony into his campaign to prevent plaintiff Singer's testimony in Molko v. Holy Spirit Association for the Unification of World Christianity, 762 P.2d 46 (Cal.1988). All three had been retained by the Unification Church in that action, in which plaintiff Singer had been retained by the plaintiff. Plaintiffs allege that "defendants' strategy shifted to attempting by fraudulent means to get a judicial determination that [Singer's] testimony was not generally accepted scientifically and therefore inadmissible." (Pls.' Mem. in Opp., at 7.) Plaintiffs allege that the appeal related to the trial court's finding that Singer's testimony was inadmissible because it lacked adequate scientific basis.
At this juncture, defendant Fowler, an officer of the APA, allegedly joined with Richardson, Anthony, Malony, the APA's General Counsel, defendant EF & B, and defendants Ennis, Bersoff and Verilli, to draft and file an amicus brief, with the APA's imprimatur, to the California Supreme Court in an effort to undermine Singer's ability to testify against the Unification Church in Molko. (Am.Compl. ¶¶ 72, 76.) Defendant Goodstein, the APA's Executive Director at the time, Fowler, and EF & B worked to secure APA participation in the Molko amicus curiae brief, circumventing APA protocols to gain the APA Executive Council's approval. (Id. at ¶¶ 77-81, 84, 85.) Plaintiffs allege that the APA's participation in such a brief was conflicted by the existence of an APA task force, authorized by the APA Executive Council in 1984 and chaired by plaintiff Singer, called the "Task Force on Deceptive and Indirect Methods of Persuasion and Control" ("DIMPAC"). The APA had directed DIMPAC to survey the negative psychological injuries caused individuals subject to identified groups, including the Unification Church and Lifespring, Inc. (Id. at 42-44.)
Due to DIMPAC's existence, Goodstein, Fowler and EF & B concealed information regarding the Molko brief in soliciting the APA Executive Council's approval of the brief. Defendants allegedly failed to make clear the nature and purpose of the filing and that the defendants were seeking a ruling by the court as to the lack of scientific acceptance of Singer's proposed testimony on coercive persuasion. (Id. at ¶ 69.) Goodstein concealed that he was on Lifespring, Inc.'s National Advisory Board. (Id. at ¶ 82.) These defendants also concealed from the Executive Council that the APA's Committee on Legal Issues, its organ for determining APA amicus participation, rejected defendant Bersoff's of EF & B and Fowler's requests. (Id. at ¶¶ 83, 86, 87.) Moreover, the Bureau of Professional Affairs and the Bureau of Social and Ethical Responsibility, other APA constituent bodies, also rejected APA participation in Molko. (Id. at ¶ 90.) Defendants, including EF & B, also concealed that established APA protocols requiring consultation with all APA constituent bodies had been bypassed. (Id. at ¶¶ 90-92.) In February 1987, the APA Executive Council approved APA's inclusion as a Molko amicus. In March, in the face of vehement protest from APA members, its name was removed from the amicus brief. (Id. at ¶¶ 97-101.)
Rather than acknowledge the brief's substantive rejection by numerous APA members, defendants Goodstein, Fowler and EF & B allegedly misrepresented to the Supreme Court of California the reason for withdrawal, stating that it occurred only because of the pendency of a task force report and that the APA's withdrawal should not be viewed as a rejection of the brief's substance. (Id. at ¶¶ 103, 104.) When Goodstein and Fowler's efforts resulted in the termination of DIMPAC and rejection of its report in May 1987, the APA misrepresented the reasons therefor, seeking to characterize the events as a repudiation of Singer's concepts of coercive persuasion. (Id. at ¶¶ 103- 113.) In essence, plaintiffs assert that review of DIMPAC's report was biased and subject to baseless criticisms. Defendant Malony mailed a letter to the Chief Justice of the Supreme Court attempting to discredit Singer by linking her to the rejected DIMPAC task force. The Supreme Court of California in Molko rejected the ruling below that coercive persuasion had not achieved sufficient scientific acceptability for the jury to hear evidence on the subject. (Id. at ¶ 126.)
Plaintiffs assert that the defendants then expanded their effort following the Unification Church's Petition for Certiorari to the United States Supreme Court filed in the Molko case. In this amicus brief, individual amici included defendants Malony, Richardson, Anthony, Stark and D'Antonio. With the APA now unavailable to join, defendants Richardson and Counsel for the Unification Church sought the support of the ASA. (Id. at ¶¶ 133, 134.) Defendant D'Antonio, Executive Director of ASA, allegedly unilaterally and without consultation with the ASA's Council, arranged for its inclusion on the Molko amicus curiae brief; specifically, he allegedly lied to ASA President Huber to the effect that ASA Council approval was previously obtained. (Id. at ¶¶ 137-145.) The amicus brief to the Supreme Court was thus filed containing allegedly false statements regarding the scientific merit of plaintiffs' theories. To protect herself and the ASA, defendant Huber allegedly joined with D'Antonio and the other defendants to fabricate a story that the ASA's Constitution in fact authorized D'Antonio's ultra vires action. (Id. at ¶¶ 138, 144, 186, 199.) Plaintiff Ofshe, who frequently collaborates with Singer, became the subject of a negative letter-writing campaign in an effort organized by D'Antonio to validate his ultra vires action. (Id. at ¶¶ 130, 131.) Letters to D'Antonio against Ofshe and in furtherance of the conspiracy against Singer and Ofshe were received from Richardson, Malony and Stark. (Id. at ¶¶ 162-167.) In August 1989, the ASA withdrew its appearance as amicus, allegedly misrepresenting to the Court its reasons for doing so when it stated that it withdrew for reasons of internal procedure. (Id. at ¶ 196, 198-200.) The culmination of defendants' efforts occurred in U.S. v. Fishman, a federal criminal action in the Northern District of California in which both Ofshe and Singer had agreed to testify on coercive persuasion. Several defendants allegedly filed fraudulent affidavits attacking plaintiffs; those defendants are: D'Antonio (Id. at 203, 204); London (Id. at ¶¶ 219-221, 223); the APA (Id. at 208, 212-214, 223); Anthony (Id. at 215-218); and Malony (Id. at ¶¶ 210, 223). Specifically, Judge Jensen was deceived into thinking that the APA and ASA withdrawals as Molko amici resulted for procedural reasons only and hence were totally unrelated to the substantive statements in those briefs. (Id. at ¶ 225.) Judge Jensen in Fishman thus stressed that the APA's and ASA's repudiations of their signatures to the amicus brief were procedural and that neither organization had substantively reversed itself when it withdrew; the court then concluded that Singer's and Ofshe's testimonies on coercive persuasion were insufficiently scientifically accepted to permit admissibility. Plaintiffs' Amended Complaint quotes a lengthy portion of Judge Jensen's opinion in Fishman. (Id.) See U.S. v. Fishman, 743 F.Supp. 713, 715-720 (N.D.Cal.1990). Plaintiffs contend that as a result of the Fishman precedent their professional and forensic reputations were discredited in future litigations. (Am.Compl. ¶¶ 226-27.)
Subsequently, defendants have repeatedly invoked Fishman to malign plaintiffs and to eliminate them as witnesses in several litigations including Green v. Maharishi Mahesh, No. 87-0016 (D.D.C.1991) (Am.Compl. ¶¶ 227- 28); Doe v. Lifespring, Inc., 85 Civ. 5887 (S.D.N.Y.) (Am.Compl. ¶¶ 221- 222); Ruehle v. Lifespring, Inc., 89 Civ. 7679 (S.D.N.Y.) (Id.). As a result of the foregoing, plaintiffs allege that their work and income from this professional activity has been largely eradicated. (Id. at ¶¶ 226, 274, 276.)
Defendant Verilli sent answers to interrogatories in Ruehle stating that the pendency of the DIMPAC task force was the only basis for withdrawing as an amicus in Molko and that following DIMPAC's submission of its draft report, BSERP adopted the position that the report did not demonstrate the scientific validity of the theory of "coercive persuasion." (Id. at ¶ 233.) In 1992, plaintiffs allege that defendant Anthony wrote negligently, falsely, with intent to defame and to further the conspiracy, an article entitled, "Law, Social Science and the Brainwashing Exception to the First Amendment" in Behavioral Sciences and the Law. This article contained information regarding Singer and Ofshe's thesis, which Anthony undertook to show had been discredited.
Throughout the Amended Complaint, the various acts attributed to various defendants are alleged to constitute mail frauds in violation of 18 U.S.C. § 1341, wire frauds in violation of 18 U.S.C. § 1343, attempts to obstruct justice in violation of 18 U.S.C. § 1503, and attempts by defendant Malony to tamper with plaintiff Singer's testimony in violation of § 136.1 of the California Penal Code. Plaintiffs further allege that the various acts constitute racketeering activity as defined in 18 U.S.C. § 1961(1)(b) and that defendants acting individually or in concert altogether constituted an "enterprise" as defined in 18 U.S.C. § 1961(4). (Id. at ¶ 237-238.) As to each defendant, the Complaint alleges that he, she or it participated in the conduct of each of the enterprises through the above-described pattern of racketeering activity which enterprises' activities affect interstate commerce in violation of 18 U.S.C. § 1962(c). (Id. at ¶¶ 240-256.) Furthermore, the Complaint alleges that each individual or organization conspired with all of the others to violate 18 U.S.C. § 1962(c) in violation of 18 U.S.C. § 1962(d). (Id. at 257-272.)
On a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), the Court must accept the allegations as true, and the defendants cannot prevail unless they show that under no interpretation of the facts alleged in the complaint can the plaintiff succeed. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1098 (2d Cir.1988), cert. denied, 490 U.S. 1007 (1989). The Court must read the complaint generously, and draw all inferences in favor of the pleader. Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir.1989).
At the heart of many of defendants' numerous arguments made in support of their motion to dismiss is their contention that the facts alleged cannot constitute a cognizable RICO claim. Indeed, the Court agrees with defendants that the acts and events detailed in the Amended Complaint, while in some cases suggestive of some manipulative activities, possibly even illegal acts, by some defendants, do not fulfill the requirements of 18 U.S.C. § 1962(c).  In order to state a claim for damages under RICO, plaintiffs must first allege the following: (1) that [ ] defendant[s] (2) through the commission of two or more acts (3) constituting a "pattern" (4) of "racketeering activity" (5) directly or indirectly invests in, or maintains an interest in, or participates in (6) an "enterprise" (7) the activities of which affect interstate or foreign commerce.
Town of West Hartford v. Operation Rescue, 915 F.2d 92, 100 (2d Cir.1990) (quoting Moss v. Morgan Stanley Inc., 719 F.2d 5, 17 (2d Cir.1983)). Having plead a violation of the substantive RICO statute, 18 U.S.C. § 1962, plaintiffs must then satisfy their burden that they were "injured in [their] business or property by reason of a violation of section 1962." 18 U.S.C. § 1964(c); see Moss, 719 F.2d at 17.
Economic Component of RICO Allegations
Having carefully read all the briefs submitted, the Court agrees with defendants that there are several bases for dismissing the Amended Complaint. In this Court's view, the superior basis for doing so--in essence, going to the heart of the problem of plaintiffs' attempt to bring their claims under RICO-- was mentioned by defendants only in a footnote of their Reply Brief. (See Defs.' Reply at 17 n. 6.) On the basis of a line of Second Circuit cases beginning with United States v. Ivic, 700 F.2d 51 (2d Cir.1983), and United States v. Bagaric, 706 F.2d 42 (2d Cir.), cert. denied, 464 U.S. 840 (1983), and still followed by this and other circuits, see e.g., National Organization for Women v. Scheidler, 968 F.2d 612, 629 (7th Cir.1992), cert. granted in part, 113 S.Ct. 2958 (June 14, 1993); United States v. Flynn, 852 F.2d 1045, 1052 (8th Cir.), cert. denied, 488 U.S. 974 (1988); United States v. Ferguson, 758 F.2d 843 (2d Cir.), cert. denied, 474 U.S. 841 (1985), plaintiffs' RICO allegations cannot stand.
As developed in Ivic and Bagaric, the "enterprise" requirement should be read in conjunction with §§ 1962(a) and (b), which leads to the conclusion that when neither the enterprise nor the racketeering acts are economically motivated, there can be no RICO violation. In other words, as analyzed by the Ivic court on the basis of the language of the statute, its legislative history, Supreme Court precedent, and Justice Department Guidelines, the term "enterprise" refers to "an organized profit-seeking venture." Ivic, 700 F.2d at 60; see Scheidler, 968 F.2d at 627. The court in Ivic also relied heavily upon United States v. Turkette, 452 U.S. 576 (1981), to note that "RICO arguably applies to any organization, legitimate or not, whose activities generate monies which can serve as a 'springboard into the sphere of legitimate enterprise.' On the other hand, groups whose activities generate no such monies are impliedly excluded." Ivic, 700 F.2d at 63 (quoting Turkette, 452 U.S. at 591). In Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479, 497 (1985), the Supreme Court rejected this Circuit's interpretation of § 1962(c) which barred civil RICO actions unless the defendant was convicted of criminal charges and the plaintiff could show "racketeering injury," and held that the plaintiffs need only allege each element of the violation and that "courts should not graft on additional elements." Scheidler, 968 F.2d at 629 (citing Sedima, 473 U.S. at 497). The Seventh Circuit concluded in Scheidler that Ivic 's analysis of Section 1962(c) was not adding elements to the RICO offense, "but merely fleshing out the definitions of those elements." Id. The Scheidler court also noted that while the Supreme Court has never directly dealt with the present issue, it has consistently emphasized "businesses," thus bolstering the conclusion that "non-economic crimes committed in furtherance of non-economic motives are not within the ambit of RICO." Id. (discussing H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229 (1989)). The Supreme Court recently granted certiorari on this issue as presented by the appellants in Scheidler. See 113 S.Ct. 2958 (June 14, 1993).
In determining whether the facts of this case warrant dismissal under Ivic, it is particularly relevant for this Court to examine the Court of Appeals' further discussion in Bagaric of the interpretation set out in Ivic. Ivic involved a criminal RICO conviction under an indictment alleging acts and threats of murder and arson against defendants who were Croatian terrorists, committed to the separation of Croatia from Yugoslovia. The conviction was reversed and ordered to be dismissed as failing to constitute a RICO offense, because the indictment did not charge that an enterprise or the predicate acts had any financial purpose. Ivic, 700 F.2d at 65. In Bagaric, the defendants were also Croatian terrorists; the charges and proof related to a terrorist organization motivated by political as well as economic goals. 706 F.2d at 53. Specifically, in addition to bombing, arson and murder, the defendants established a scheme to extort money from politically moderate Croatians in the United States to support their activities. Id. at 48. Several individuals who resisted the extortion demands were killed. Id. at 50. The Court of Appeals stated that its holding in Ivic merely required a financial purpose in either the enterprise or the predicate acts; the Court declined to permit primary political motivation to shield the "more than fifty acts of the classic economic crime of extortion" and the many "violent crimes perpetrated ... in aid of the extortion scheme." Id. at 58; see also Ferguson, 758 F.2d at 853 (only some financial purpose necessary; upholding self-professed revolutionaries' RICO conviction because they were charged with ten robberies and attempted robberies of armored trucks and used that money to support members). Thus, pure economic motive is certainly not required, but the crimes or the enterprise itself must have an economic purpose.
The Amended Complaint in the present case simply cannot sustain a RICO claim. However broadly RICO's language and purpose could be extended, to apply RICO to the circumstances alleged here would be beyond any reasonable application in light of Ivic and Bagaric. Assuming that plaintiffs have plead an "enterprise,"  the enterprise clearly lacks an economic motivation. In the first paragraphs of the Amended Complaint, plaintiffs define the objectives of defendants' enterprise. Defendants' alleged motivation was to discredit plaintiffs' theory of coercive persuasion in order to protect from civil liability the Unification Church and other organizations. Defendants' efforts were not aimed at impoverishing plaintiffs; in fact, several defendants who testified concerning coercive persuasion had an interest in the controversy continuing so that their services would be necessary to counter plaintiffs' testimony. 
The allegation that defendants sought to protect various organizations from civil liability does not, under the circumstances, lend the "enterprise" an economic motivation. No defendant nor the enterprise as a whole could have had an economic, as distinct from a philosophical, political or religious motivation of the nature outlined in Ivic, Bagaric and Scheidler, for protecting various so-called cults from civil liability.  The enterprise alleged is not one whose monies could conceivably serve as a " 'springboard into the sphere of legitimate enterprise.' " Ivic, 700 F.2d at 63 (quoting Turkette, 452 U.S. at 591). Attenuated economic motivations, such as those rejected in Scheidler and by the district court in Town of West Hartford v. Operation Rescue, 792 F.Supp. 161, 168 (D.Conn.1992), vacated on other grounds, 991 F.2d 1039 (2d Cir.1993), will not suffice.
In Scheidler and Town of West Hartford, defendants sought to close women's health centers as part of their campaigns opposing legal abortions. Plaintiffs in those cases argued that defendants committed unlawful acts to raise funds such as soliciting contributions in conjunction with publicizing their illegal acts; moreover, defendants sought to increase plaintiffs' costs of doing business. The courts rejected those efforts to bring those defendants' illegal activities within RICO's sphere. Scheidler, 968 F.2d at 630; Town of West Hartford, 792 F.Supp. at 168 (defendants' "overarching motive" is not to make money, but to stop plaintiff from performing abortions). Similarly, the fact that plaintiffs here may lose income or that various organizations may be spared civil liability costs is incidental to defendants' alleged objective of discrediting coercive persuasion. As the court concluded in Scheidler, it seems unreasonable under Ivic to equate economic effect on the plaintiffs or third parties with economic motive. 968 F.2d at 630. The court in Town of West Hartford, 792 F.Supp. at 168-69, noted that this circuit's precedent requires plaintiff to establish that the purpose of defendants' activities is sufficiently economic in nature, in contrast to the interpretation given RICO by the Third Circuit. See Northeast Women's Center, Inc. v. McMonagle, 868 F.2d 1342 (3rd Cir.), cert. denied, 493 U.S. 901 (1989). In this circuit, RICO can have no role in sanctioning conduct motivated by academic and legal differences. No significant economic motive can be discerned from this or any other allegations in the Complaint related to the purposes of the defendants' alleged enterprise.
Similarly, the alleged predicate acts, mail fraud, wire fraud and obstruction of justice, have not been shown to be economically motivated, in contrast to Bagaric and Ferguson where the predicate acts involved extortion and robbery, respectively, crimes involving economic gain by definition. As discussed supra and infra, defendants alleged violation of mail fraud, wire fraud and obstruction of justice statutes was part of an allegedly intricately interrelated set of actions whose common objective was to discredit plaintiffs' theories. Economic motivation as to any of the predicate acts is absent.
Injury to Business or Property
The Court will examine several alternative bases for dismissing the present Amended Complaint. To recover civil damages, plaintiffs must allege injury to their business or property by reason of a violation of section 1962. 18 U.S.C. § 1964(c). " 'The phrase 'by reason of' requires that there be a causal connection between the prohibited conduct and plaintiff's injury.' " County of Suffolk v. Long Island Lighting Co., 907 F.2d 1295, 1311 (2d Cir.1990) (quoting Norman v. Niagara Mohawk Power Corp., 873 F.2d 634, 636 (2d Cir.1989)); Town of West Hartford, 915 F.2d at 103. Plaintiffs must plead "but for" causation as well as proximate causation. Holmes v. Securities Investor Protection Corp., 112 S.Ct. 1311, 1317 (1992). The Second Circuit has also held that "the RICO pattern or acts proximately cause a plaintiff's injury if they are a substantial factor in the sequence of responsible causation, and if the injury is reasonably foreseeable or anticipated as a natural consequence." Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 23-24 (2d Cir.1990).
Plaintiffs allege injury to their business in terms of loss of income as a result of injury to their reputations as forensic experts. (Am.Compl. ¶¶ 274, 276.) This Court finds the causal link between defendants' alleged acts and plaintiffs' alleged injury to be too attenuated. It is simply absurd to attribute plaintiffs' alleged injury primarily to the Fishman court's conclusions, which in turn resulted from a full adversarial evidentiary hearing and briefing. Even if it were possible to consider plaintiffs' allegations in conjunction with Judge Jensen's conclusions in Fishman and conclude that Judge Jensen was somehow "duped" by defendants' improper acts (and, in this Court's view, it is not possible to do so),  no RICO causation could be shown. Defendants' acts did not proximately cause plaintiffs' alleged injury. The diligent efforts of some (though not necessarily all) of the defendants to discredit plaintiffs' theories did not legally "cause" their loss of income any more than Judge Jensen did. A loss of future income as a forensic expert is not compensable under RICO by anyone involved in discrediting the expert's testimony and views any more than it is compensable against the court involved.  If plaintiffs' had complaints concerning the evidence adduced in Fishman or any other proceeding, they should have been made in the context of that judicial proceeding.
Related to causation under Section 1964(c) are serious problems with the nature of the injury plaintiffs allege. Plaintiffs allege damage to their business reputations and, as a result, loss of income. There is authority to support damage to business reputation as the basis for a claim pursuant to 18 U.S.C. § 1964(c), see Philatelic Foundation v. Kaplan, 85 Civ. 8571, 1986 WL 5629, at (S.D.N.Y. May 9, 1986) (nonspeculative, nonabstract injury to business reputation may be compensable under Section 1964(c)), as well as to support damage for future injuries, see Zenith Radio Corp v. Hazeltine Research, Inc., 401 U.S. 321, 339 (1971) (future damages are unrecoverable if the fact of their accrual is speculative or their amount and nature unprovable). However, plaintiffs' allegations of pecuniary damage resulting from damage to their reputations are too speculative. Defendants' alleged efforts to discredit plaintiffs' theories will not necessarily result in concrete damages and plaintiffs have alleged none thus far. In Zenith, the Supreme Court clarified that future damages may be awarded in a civil antitrust action where plaintiff has already suffered injury and will continue to suffer that same injury in the future. 401 U.S. at 339. As noted in Kaplan, a particularized measure of reputational damage may be compensable under RICO, but the allegations must overcome the issues of remoteness, speculativeness and causation. As in Roitman v. New York City Transit Authority, 704 F.Supp. 346, 349 (E.D.N.Y.1989) (McLaughlin, J.) (expectations of future employment "bespeak personal interests rather than property interests"), plaintiffs damage claims have a distinctively non-economic, personal aspect: plaintiffs' primary concern seems to be vindication of their scientific theories; that pecuniary loss could result from nonvindication remains a speculative, unsubstantiated allegation at this point.
Alleged "Pattern" of "Racketeering Activity"
Section 1962(c) requires allegations of multiple predicate acts, i.e., "racketeering activity," as defined in 18 U.S.C. § 1961(1). Plaintiffs have alleged several instances each of violations of 18 U.S.C. § 1341 (relating to mail fraud); 18 U.S.C. § 1343 (relating to wire fraud); 18 U.S.C. § 1503 (relating to obstruction of justice). The Court need not deal with each and every allegation of a predicate act on the part of the various defendants due to the other weaknesses in plaintiffs' RICO claims; in any event, the Court believes that it is highly unlikely that any of those acts constitute a violation of the wire or mail fraud or obstruction of justice statutes.
Moreover, no "pattern" of racketeering activity can be discerned from the acts alleged, even if several of them constitute predicate acts. As emphasized in dictum by the Supreme Court in Sedima, " '[i]t is the factor of continuity plus relationship which combines to produce a pattern.' " 473 U.S. at 496 n. 14 (quoting S.Rep. No. 91-617, p. 158 (1969)); see United States v. Indelicato, 865 F.2d 1370, 1381 (2d Cir.1989) (en banc ) (Sedima footnote 14 entitled to deference; "the language of the statute and the legislative history support the essential point of that dictum"). Because the acts alleged were supposedly committed for the limited objective of discrediting plaintiffs' theories, the element of continuity is lacking. See Mead v. Schaub, 757 F.Supp. 319, 323 (S.D.N.Y.1991) ("A critical factor in determining whether the predicates are 'continuing' under RICO is the terminable nature of the goal or purpose of the enterprise"). That plaintiffs' allegations are numerous, display interesting interconnections between various players (see Pls.' Ex. to Sur-Reply), and allegedly began in 1985 and may continue until their thesis is even further discredited is not sufficient. In Manax v. McNamara, 842 F.2d 808 (5th Cir.1988), the Fifth Circuit upheld a district court's dismissal of a RICO complaint (similar to the present case) where plaintiff alleged that defendants, including a mayor, attorneys employed by the mayor, and various newspaper publishers, formed an association in fact to destroy his medical reputation, to deprive him of his medical license and to extort money. The Fifth Circuit discussed Beck v. Manufacturers Hanover Trust Co., 820 F.2d 46 (2d Cir.1987), cert. denied, 484 U.S. 1005 (1988), and relied upon its reasoning that an association is not sufficiently continuing where the enterprise " 'had but one straightforward, short-lived goal,' " 842 F.2d at 811 (quoting 820 F.2d at 191), to conclude that "[t]he association was ad hoc, i.e., it was formed for the immediate accomplishment of one specific end. It therefore lacked the continuity required to bring it within RICO's ambit." Manax, 842 F.2d at 812. As in Manax, the association alleged here "presumably will disband upon attainment of that goal [the destruction of Manax's medical practice]." 842 F.2d at 811.
In Indelicato, however, the Second Circuit, en banc, questioned Beck 's dismissal of a civil RICO complaint because of the enterprise's "straightforward, short-lived goal," 820 F.2d at 51, casting some doubt on Manax 's precedential value in this Circuit. Nevertheless, the majority opinion in Indelicato, along with Judge Oakes' concurrence, would appear to support dismissal of the present case. In addition to holding that proof of two acts of racketeering activity without more does not suffice to establish a RICO pattern, the Court of Appeals also held that the concepts of relatedness and continuity are attributes of activity, not of a RICO enterprise, and that a RICO pattern may not be established without some showing that the racketeering acts are interrelated and that there is continuity or a threat of continuity; that a pattern may be established without proof of multiple schemes, multiple episodes, or multiple transactions; and that racketeering acts that are not widely separated in time or space may nonetheless, given other evidence of the threat of continuity, constitute a RICO pattern. 865 F.2d at 1381. However, as emphasized by Judge Oakes' concurrence, the facts of Indelicato demonstrate that these holdings cannot be read in a vacuum.
This is a case where evidence concerning the nature of the RICO enterprise also served to prove the existence of a pattern of racketeering activity. Facts external to the predicate acts--the three murders--were essential to prove relatedness and the threat of continuity. [Defendant] committed murders which were critical to the [Commission of La Cosa Nostra's] achieving its goal of resolving family leadership disputes; these were not "isolated acts of racketeering activity."
The criminal nature of the enterprise involved in this case provides the continuity or threat of continuity necessary to establish a pattern.
Id. at 1385-86 (Oakes, J., concurring) (quoting Sedima, 473 U.S. at 496 n. 14). Unlike Indelicato, there is no connection between the various defendants' disjointed conduct and a broader common criminal purpose of a racketeering enterprise. To the extent that some predicate acts may be related to furthering defendants' alleged objective to discredit plaintiffs theories, these acts are simply too isolated, sporadic and limited in their goal to implicate Congress' concern with long-term criminal conduct. See H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. at 242.
Throughout the period encompassed by the allegations, the parties were obviously engaged in a heated debate as to the scientific validity of the theory of coercive persuasion. The debate's focus moved from the halls of academic institutions, the pages of psychology and sociology publications, and the meetings of various professional associations such as the APA and the ASA, to the courtroom. That various defendants had strong opinions as to the scientific invalidity of plaintiffs' theories and chose to express their views to others over the telephone and through the mails and to several courts does not transform those acts into fraud constituting a RICO conspiracy. In this context, plaintiffs, engaged to testify as to the validity of their theories, had a professional and possibly a financial stake in the outcomes. However, this Court is unconvinced that plaintiffs' complaints regarding the conclusions of the several courts involved, which conclusions were preceded by plaintiffs' (and the parties') opportunity to counter any "misrepresentation" in defendants' submissions and testimony, and the internal processes of the APA and the ASA, possibly abused by several defendants, belong in a federal courtroom. The vast majority of the predicate RICO acts alleged relate to court proceedings and to an intense difference in opinion as to the validity of plaintiff's theories.br /> Plaintiffs' best remedy remains not with civil RICO, but in continuing to maintain that their theories are sound within appropriate scientific and legal fora. That evidence of coercive persuasion was not admitted in Fishman (and in several actions since then) does not mean that the academic or legal debate must cease. The First Amendment will continue to protect plaintiffs', as well as defendants', assertion of their views regardless of the seemingly overly zealous efforts of defendants or the so-called cults they allegedly seek to protect. In seeking to ensure "uninhibited, robust, and wide-open debate on public issues," New York Times Co. v. Sullivan, 376 U.S. 254, 270 (1964), the First Amendment endeavors to ensure that reason will prevail.
This Court thus finds that plaintiffs have failed to allege a viable claim under civil RICO; neither the alleged predicate acts nor the RICO enterprise itself establish that an economic motive was present. Moreover, the Amended Complaint fails to allege nonspeculative injury, that defendants' actions were the proximate cause of the injury suffered by plaintiffs, or that a "pattern" of racketeering activity exists here.
State Law Claims
As to plaintiffs' state law claims (as to which plaintiffs do not assert diversity jurisdiction), because the Court dismisses plaintiff's sole federal claim, it declines to exercise supplemental jurisdiction over the pendent state law claims. Plaintiffs have indicated no reason this Court should retain jurisdiction over the state claims. In the absence of compelling considerations of fairness, this Court will adhere to the precept that "[n]eedless decisions of state law should be avoided both as a matter of comity and to promote justice between the parties, by procuring for them a surer-footed reading of applicable law." United Mine Workers of America v. Gibbs, 383 U.S. 715, 726 (1966). If plaintiffs believe they have viable state law claims, and this Court expresses no opinion as to the viability of any of those claims, then they should file an action in the appropriate state court.
For the foregoing reasons, plaintiffs' motion for default judgment against defendant Stark is denied. Defendants' joint motion to dismiss the Amended Complaint is granted, and the Amended Complaint is dismissed.
- Section 1962(c) provides:It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly of indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.
- Pursuant to 18 U.S.C. § 1961(4), " 'enterprise' includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." There is indeed substantial doubt that all of the defendants here constitute an enterprise; as one district court stated, "[plaintiffs] must show that each alleged conspirator 'participated in the conspiracy with knowledge of the essential nature of the plan.' " Mylan Laboratories, Inc. v. Akzo, N.V., 770 F.Supp. 1053, 1066-67 (D.Md.1991) (citation omitted). The facts as alleged do not substantiate the notion of an enterprise where all of the individuals and groups involved knew of the ultimate objective of their acts to discredit and harm Singer and Ofshe. For example, the APA, the ASA, and various officer defendants have certainly not consistently aided the alleged objective of the defendants. In fact, the members of this alleged enterprise sometimes defrauded other members and sometimes frustrated the enterprise's objective, such as when the APA dismissed Malony's ethics complaint against Singer.
- FN3. These paragraphs read:
1. Plaintiffs individually and jointly contend that the defendants individually, jointly and in various combinations acted and conspired to defame and destroy [plaintiffs'] reputations as professionals and their reputations as forensic experts in the areas of psychology and sociology synonymously described as thought reform or coercive persuasion. This subject encompassed by both psychology and sociology concerns methods employed to manipulate and/or coerce individuals so as to cause them to behave in ways contrary to their initial intentions.
2. More specifically, Plaintiffs contend that defendants conspired, committed crimes, engaged in racketeering as well as committed varied torts in their effort to discredit Plaintiffs falsely and tortiously so as to prevent them from (or at least impair their ability to) continuing to function as highly respected professionals and expert witnesses in civil and criminal litigations in which this expertise is relevant (the "Conspiracy").
3. Plaintiffs maintain that it was in an effort to protect from civil liability the Unification Church, as well as recklessly run so called new religions, and commercial Large Group Awareness Trainings that impelled the defendants to undertake their largely illegal improper and tortious actions.
(Am.Compl. ¶¶ 1-3.)
- Plaintiffs allege that defendants Malony, Anthony, Richardson, Stark and London used the conspiracy as a means for financial gain. (Am.Compl. ¶ 4.) Certainly, they have an interest in the Singer-Ofshe thesis retaining at least minimal credibility so that litigants will be forced to retain them to counter Singer and Ofshe.
- In this Court's view, several defendants lack any malevolent motivation, financial, political, religious or other, to participate in the alleged conspiracy; notably, the APA, the ASA and the lawyers and law firms involved were acting within the normal course of their respective professional activities. As discussed in footnote 2 supra, plaintiffs have not alleged facts to support either knowledge of any enterprise objective or a specifically financial objective on the part of all of the alleged co-conspirators.
- A separate issue arising from the language in Section 1964(c) is whether plaintiffs must be the intended victims of defendants' wire or mail fraud allegations in order to have standing under that section. Although the Second Circuit has not yet decided whether the "convergence theory"--the notion that "convergence of identity seems inherent in the idea of fraud as provided in the fraud statutes and defined by the Supreme Court in McNally [v. United States, 483 U.S. 350 (1987) ]," Mylan Laboratories, Inc. v. Azco, N.V., 770 F.Supp. 1053, 1074 (D.Md.1991)--of mail fraud applies, see U.S. v. Eisen, 974 F.2d 246, 253 n. 2 (2d Cir.1992), cert. denied, 113 S.Ct. 1619 (1993), several courts in this district have repudiated it. See Metromedia Co. v. Fugazy, 753 F.Supp. 93, 98 (S.D.N.Y.1990), aff'd, 983 F.2d 350 (2d Cir.1992) ("Even if only a third party, and not the plaintiff, was deceived, the requirement of reliance is met if the plaintiff was injured by the fraud."); Shaw v. Rolex Watch U.S.A., Inc., 726 F.Supp. 969, 972-73 (S.D.N.Y.1989) ("A plaintiff who is injured as a proximate result of fraud should be able to recover regardless of whether he or a third party is the one deceived"); Galerie Furstenberg v. Coffaro, 697 F.2d 1282, 1286-87 (S.D.N.Y.1988). Because this Court presently decides that plaintiffs have not plead adequate RICO causation nor injury, the Court will not examine whether to apply convergence theory.
- Having read the opinion in United States v. Fishman, 743 F.Supp. 713 (N.D.Cal.1990), it is clear to this Court that Judge Jensen had a full understanding of the controversy surrounding coercive persuasion; for example, he was well aware that the APA's and the ASA's association with various amicus briefs in Molko became controversial. See id. at 718. His appreciation of that fully supports his conclusion that "[a]t best, the evidence establishes that psychiatrists, psychologists, and sociologists disagree as to whether or not there is agreement regarding the Singer-Ofshe thesis." Id. at 720. Judge Jensen did not conclude that plaintiffs' thesis had no merit; rather, he concluded that "[t]hought reform is a complex and controversial subject within the scientific community" and not that either the ASA or the APA unequivocally supported the Singer-Ofshe thesis' detractors, but merely that "the Singer-Ofshe thesis lacks the imprimatur of the APA and ASA." Id.
- FN8. Defendants are correct to note that any of plaintiffs allegations relating to statements made in the course of judicial proceedings (there are certainly several such statements) are privileged and cannot be the basis of a RICO cause of action. Under California law, presumably relevant to both the Molko and Fishman actions, any communication made in judicial or quasi-judicial proceedings by litigants or other participants authorized by law to achieve the objects of the litigation and that have some connection or logical relation to the action are privileged. See AroChem Int'l, Inc. v. Buirkle, 968 F.2d 266, 271 (2d Cir.1992) (citing Silberg v. Anderson, 786 P.2d 365 (1990) and Cal.Civ.Code § 47(b)(2) (Deering 1991)). The Court of Appeals for the District of Columbia stated:The doctrine of absolute immunity for statements in judicial proceedings reflects a judgment that the need for completely free speech for litigants is dominant, and that this freedom is not to be endangered by subjecting parties to the burden of defending their motives in subsequent slander litigation, or to the risk that juries may misapprehend those motives.Brown v. Collins, 402 F.2d 209, 213 (D.C.Cir.1968).
- FN9. Certainly, the allegations against the attorney defendants are particularly conclusory and devoid of facts to support intentional fraudulent acts. The dangers of permitting collateral attacks against attorneys using RICO have been expressed by other courts. See e.g., Gunn v. Palmieri, 89 Civ. 111 S.Ct. 758, 759 (E.D.N.Y. March 21, 1989), aff'd, 904 F.2d 33 (2d Cir.1990).
Singer v. American Psychological Association