Overview
Judge Forrest yesterday granted the defendants' summary judgment motion in a case accusing FedEx of violating RICO by overcharging for packages based on weight and Canadian customs fees. She found that the plaintiffs had failed to show the necessary "distinctness" between the FedEx affiliate that committed the alleged wrongs and the "enterprise" through which it allegedly acted:
The RICO statute imposes liability on persons that improperly use a distinct entity as a vehicle for misdeeds. It is not a statute that attaches federal criminal and civil liability to routine claims of fraud involving a parent and its subsidiary, or two sister corporations. The undisputed facts of this case demonstrate that the defendant corporations, a holding company and one of its subsidiaries, are not “distinct” from the alleged enterprise, another wholly owned subsidiary, for RICO purposes. If plaintiff’s theory of RICO distinctness were accepted, it would transform every routine allegation of fraud involving a company that uses the routine holding company/subsidiary structure at issue here into a RICO claim. That is not and should not be the law.