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Labor

Court Finds that Requirements of RICO Are Met

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In Smithfield Foods, Inc. v. United Food and Commercial Workers International Union, 585 F. Supp. 2d 789, 2008 WL 4610307 (E.D. Va. Oct. 14, 2008), the United States District Court for the Eastern District of Virginia held that the Hobbs Act's definition of "wrongful" did not apply to state law extortion predicates of Racketeer Influenced and Corrupt Organizations Act (RICO) claims, that threats of extortion were not constitutionally protected speech, and that the plaintiff had introduced sufficient disputed material facts regarding its RICO claims to survive summary judgment.

Background

Smithfield Foods, Inc., brought an action for violations of RICO and state law claims of tortious interference with contract and unfair trade practices against the United Food and Commercial Workers International Union (UFCW). Id. at *1. Smithfield claimed that the UFCW publicly announced a "corporate campaign" against it in an attempt to force it to recognize the UFCW as the collective bargaining representative of the employees at its pork processing plant in Tar Heel, North Carolina. Id.

Arguments

The defendants argued that Smithfield failed to satisfy RICO extortion's "wrongfulness" and "obtaining from another" requirements, that Smithfield's claims were barred by the First Amendment and federal labor laws, and that Smithfield failed to meet the RICO "pattern" element. Id. at *2.

Smithfield argued that the civil RICO statute did not require it to show an unlawful goal of the extortionate scheme, but simply to show that the defendants made a threat as a means to obtain something of value. Id. at *8.

Analysis and Holdings

The Hobbs Act, 18 U.S.C. § 1951(a) et seq., defines extortion as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear." Id. at *4. The court noted that a person does not employ "wrongful means" by simply employing means that are illegal unto themselves, but by exploiting the means identified in the Hobbs Act ("actual or threatened force, violence, or fear") to obtain property to which "the alleged extortionist has no lawful claim." Id. The court further explained that the RICO statute defines "racketeering activity" as any act or threat involving extortion or other acts "which [are] chargeable under State law," and that for a state extortion offense to qualify as a predicate act under RICO, the conduct must be capable of being generically classified as extortionate (i.e., by "obtaining something of value from another with his consent induced by the wrongful use of force, fear or threats"). Id. at *5. However, contrary to the Hobbs Act, Virginia and North Carolina courts hold that the "wrongfulness" requirement of extortion does not require that the aim of the extortionate scheme be unlawful, so the requirement can be met solely by reference to the means employed. Id.

After consideration, the court held that the Hobbs Act's definition of "wrongful" did not apply to state law extortion predicates of RICO claims and that Smithfield had presented sufficient evidence for a jury to conclude that the defendants acted with a "wrongful purpose" (i.e., with wrongful means). Id. at *8. The court next adopted the rule that threats of extortion are not constitutionally protected speech, and it rejected the defendants' constitutional defenses. Id. at *13. The court also held that because RICO's "obtaining from another" requirement is satisfied by a transfer or purported transfer of a legal interest in property, Smithfield had a viable claim against the defendants for their extortionate attempts to obtain highly valuable legal rights belonging to Smithfield. Id. at *16. The court further concluded that Smithfield had presented sufficient evidence to meet RICO's "pattern" requirement, and that its claims were not preempted by other doctrines; therefore, the court denied the defendants' motion for summary judgment. Id. at *17-21.

The case was decided on October 14, 2008.