Last time, we looked at interpretive strategies designed to avoid anti-fraud regulatory regimes like those skirted in Enron and other corporate fiascos. But what of laws that can support readings that can fairly be interpreted to allow or prohibit certain business practices? Statutes that are open textured and vague (like the Sherman Act and the Racketeer Influenced and Corrupt Organizations Act (RICO)) present complicated questions of interpretation and application that can’t be mastered in a day. RICO is especially difficult because it has a multi-layered structure threaded with (sometimes defined) concepts invented for this statute alone. This is ideal land upon which to lay out a multitude of interpretive tracks, which, as Karl Llewellyn once remarked more generally, “lead in happily variant directions.”

So what do we know about RICO’s purpose? Passed as Title IX of the Organized Crime Control Act of 1970 (OCCA), RICO has proven to be something of an interpretive parlor game for lawyers over its 50-year history. The problems with the statute are not confined to the complicated structure I just mentioned. It’s also vague in the linguistic and philosophical sense of having borderline cases (e.g., what’s “tall” or a “mountain”?). Finally, and perhaps most problematically, it’s of uncertain purpose.

A lawyer facing an interpretive question has an array of tools at his or her disposal. In choosing one approach over another in my own practice, I’ve found it helpful first to sort the candidates into the categories that Neil MacCormick has suggested: linguistic, systemic and teleological-evaluative arguments (all of which can be suffused with intentional arguments). Linguistic arguments often present an appeal to “plain meaning” or “ordinary language.” Systemic arguments evaluate particular text bites in a larger context, perhaps in other sections of a statute, an entire statutory title, or other aspects of a whole legal system. Teleological-evaluative arguments focus on the consequences of rival interpretations and try to match the preferred interpretation with particular salutary social ends or values. And, as one might suspect, each of these techniques necessarily invokes (or claims to demonstrate) the “intent” or “purpose” of the legislature in choosing particular words, leaving out particular words, and so forth.

So let’s start there—with purpose—and see where that takes us. 

As early as the 1940s, newspaper and magazine articles, as well as local crime commissions, warned that a national crime syndicate was seizing control of America’s major cities. At the time, there were few federal options—and much appetite—for attacking organized crime. Taking up the challenge, Sen. Estes Kefauver of Tennessee introduced a resolution in 1950 authorizing the Committee on the Judiciary to investigate interstate, organized criminal activities. This committee ultimately issued four reports, which confirmed the existence of criminal syndicates and their pattern of corrupting state and local government. But the committee’s proposed legislative solutions went nowhere at the time.

The story picks up again in earnest in 1967 with the report of the President’s Commission on Law Enforcement and Administration of Justice (popularly known as the Katzenbach Commission). This report memorializes the public narrative that was then gelling around the social problems attributable to organized crime. As President Nixon told Congress, “[O]rganized crime has deeply penetrated broad segments of American life. In our great cities, it is operating prosperous criminal cartels. In our suburban areas and smaller cities, it is expanding its corrosive influence.” The problem was essentially threefold. First, organized criminals have a “virtual monopoly of illegal gambling, the numbers racket, and the importation of narcotics.” Second, the proceeds of these illicit acts give these criminals the power and resources to underwrite criminal businesses like loansharking, to “infiltrate and corrupt organized labor,” and to increase “its enormous holdings and influence in the world of legitimate business.” Third, although “the 24 families of La Cosa Nostra” had been subject to multiple prosecutions, “not a single one of the 24 Cosa Nostra families have been destroyed” and the Mafia chieftains had “been notoriously successful in ‘getting off’ even in those relatively few cases in which the evidence has warranted the prosecution.” To ameliorate this situation, anti-racketeering hawks offered a bill crafted to cure these ills, including mitigating the effects of infiltration of legitimate organizations. 

This bill, which found final expression in the OCCA, aimed to cure “defects” in existing laws. The task for a lawmaker attempting to set these defects right, then, would start from a consideration of what organized criminals do. First is the illicit commercial angle. Organized criminals make goods and services available that would otherwise be unavailable because they are illegal, like narcotics, gambling, and prostitution. Second, they police their markets and rid them of rivals through murder and other violent acts. Third, they corrupt law enforcement and other public officials through bribery and intimidation. Fourth, they invest the proceeds of illegal activities in legitimate businesses, through which they may commit further illegal acts like money laundering and tax evasion by skimming profits. Fifth, they muscle in on legitimate organizations like unions to gain access to pension funds and to take over lucrative lines of business like longshoring or trucking. Sixth, they extract money from legitimate business through protection rackets or loansharking. Seventh, they commit crimes like bank robberies and hijacking. Not surprisingly, the OCCA brings many of these activities within its sights: Eight titles of the act deal with the difficulties associated with prosecuting members of organized crime, one federalizes criminal law relating to illegal gambling, one creates a commission to evaluate the effectiveness and constitutionality of federal criminal laws and practices, one deals with explosives (a late addition with little apparent connection to the rest of the act) and one, Title IX, is RICO.

If we set the crime-commission and legislative-committee crime reports from the mid-to-late 1960s alongside the OCCA, we see that the major objects of concern repeatedly articulated in the reports—prosecution difficulties, illegal gambling, and infiltration of legitimate businesses—map quite nicely onto the structure of the OCCA. With respect to Title IX, as of Jan. 21, 1970, it was entitled “Corrupt Organizations” and said to “[p]rohibit[] infiltration of legitimate organizations by racketeers or proceeds of racketeering activities where interstate commerce is affected[, and] [a]uthorize[] civil remedies comparable to anti-trust to prevent violation of law by divestiture, dissolution or reorganization.” Plenty of other legislative materials echo this anti-infiltration theme: “Section 1962 establishes a threefold prohibition aimed at stopping the infiltration of racketeers into legitimate organizations.” Title IX “has as its purpose the elimination of the infiltration of organized crime and racketeering into legitimate organizations operating in interstate commerce.”

In this respect, then, RICO is in sync with the public narrative as expressed in the various legislative and crime-commission reports and executive branch commentary. This could mean that RICO’s purpose may be narrower than one might assume. No one doubts that its net is fine enough to catch groups other than the Mafia (e.g., Hell’s Angels or the Irish Mob)—i.e., it’s not just an anti-Mafia statute. There’s good reason, though, to think that despite the relatively narrow scope of RICO within the larger OCCA, its new remedies would attack the roots of organized criminal organizations and prevent their regeneration. Remember, despite the best efforts of prosecutors, “[n]ot a single one of the ‘families’ of La Cosa Nostra has been destroyed.” So one aim of RICO was to “remove the leaders of organized crime from their sources of economic power.” “Instead of their positions being filled by successors no different in kind, the channels of commerce can be freed of racketeering influence.”

There is thus a non-frivolous argument that RICO was never intended to reach beyond the corruption and infiltration of legitimate organizations. But as infomercial hosts inevitably say in hawking their products, “That’s not all!” For as the passages we just reviewed show, there are plainly references in the legislative history to RICO having a broad “commercial” purpose. For example, as late as July 1970, legislative materials continued to stress the analogy to antitrust law: “Title IX, dealing with racketeer influenced and corrupt organizations, was modeled on the [American Bar Association’s] 1968 resolution endorsing ‘in principle’ all legislation having as its purpose ‘the adopting of the machinery of antitrust laws to the prosecution of organized crime.’” And as Justice Clarence Thomas more recently emphasized in a dissenting opinion, Congress was concerned about the illegitimate competitive advantage that racketeers had over their legitimate rivals: “The sponsor of a Senate precursor to RICO noted that ‘the evil to be curbed is the unfair competitive advantage inherent in the large amount of illicit income available to organized crime.’” Upon adding a provision for a civil remedy in a subsequently proposed bill, Sen. Roman Hruska noted: “[This] bill also creates civil remedies for the honest businessman who has been damaged by unfair competition from the racketeer businessman.”

So, at a minimum, there’s a tension in RICO’s legislative history on the related questions of RICO’s civil reach and its relationship to the antitrust laws. More specifically, was RICO’s civil-standing provision (section 1964(c)) modeled on the language of section 4 of the Clayton Act because it was a handy articulation of the causation standard necessary to invest a private litigant with standing to pursue an otherwise criminal violation? Or did this selection signal that the antitrust and RICO acts were to work in tandem? Or both? It’s hard to say, but the questions throw us onto the crisscrossing paths of two teleological inquiries. First, what’s the relationship between the words of the statute and what the adopters of those words hoped to accomplish with them? Second, how is one to reconcile RICO’s potential as a powerful prosecutorial weapon with a general reluctance to federalize plain-vanilla commercial and consumer claims? What we will find, I think, are context-specific formulations of RICO’s “intent” or “purpose” that are observable when courts narrate RICO’s legislative history.

With this history in mind, we’ll dive next time into the interpretive thicket and show how and why reasonable minds may differ over statutory language.

Reprinted with permission from © ALM Media Properties LLC. All rights reserved.