Pik-Coal Company v. Big Rivers Electric Corporation , Eddie Ray Brown , Embro Holdings, Inc., E & M Coal…

1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0010P (6th Cir.)
File Name: 00a0010p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
P IK-C OAL C OMPANY ,
Plaintiff-Appellant,
v.
BIG R IVERS ELECTRIC
C ORPORATION , EDDIE R AY
BROWN , EMBRO HOLDINGS,
INC., E & M C OAL C OMPANY ,
R OSE BROTHERS TRUCKING ,
INC., S OLAR S OURCES, INC.,
W ILLIAM H. THORPE , and
S HIRLEY P RITCHETT ,
Defendants-Appellees.
;>

1
No. 98-5974
Appeal from the United States District Court
for the Western District of Kentucky at Owensboro.
No. 94-00049—Jennifer B. Coffman, District Judge.
Argued: August 12, 1999
Decided and Filed: January 7, 2000

-- 1 of 8 --

2 Pik-Coal Co. v. Big Rivers
Electric Corp., et al.
No. 98-5974
*The Honorable Thomas G. Hull, United States District Judge for the
Eastern District of Tennessee, sitting by designation.
1On October 2, 1998, in accordance with the plaintiff-appellant’s
stipulation, the Sixth Circuit released defendant-appellee Big Rivers from
this action, because, on September 25, 1996, it had commenced Chapter
11 bankruptcy proceedings. See 11 U.S.C. § 362 (automatic stay).
Before: KRUPANSKY and RYAN, Circuit Judges;
HULL,* District Judge.
_________________
COUNSEL
ARGUED: Harry L. Mathison, KING, DEEP &
BRANAMAN, Henderson, Kentucky, for Appellant. Daniel
Kelley, ICE, MILLER, DONADIO & RYAN, Indianapolis,
Indiana, for Appellees. ON BRIEF: Harry L. Mathison,
KING, DEEP & BRANAMAN, Henderson, Kentucky, for
Appellant. Daniel Kelley, ICE, MILLER, DONADIO &
RYAN, Indianapolis, Indiana, David V. Miller, Greg A.
Granger, BOWERS, HARRISON, KENT & MILLER,
Evansville, Indiana, for Appellees.
_________________
OPINION
_________________
KRUPANSKY, Circuit Judge. The plaintiff-appellant Pik-
Coal Company (“Pik”), an Indiana corporation engaged in the
coal brokering business, has contested the initial forum’s
dismissal, for failure to state a claim, of its amended
complaint against defendants-appellees Big Rivers Electrical
Corporation (“Big Rivers”),1 Eddie Ray Brown (“Brown”),
Embro Holdings, Inc. (“Embro”), E & M Coal Company (“E
& M”), Rose Brothers Trucking, Inc. (“Rose”), Solar Sources,
Inc. (“Solar”), William H. Thorpe (“Thorpe”), and Shirley

-- 2 of 8 --

14 Pik-Coal Co. v. Big Rivers
Electric Corp., et al.
No. 98-5974
11Excepting the federal RICO claim in controversy (count one), this
reviewing forum expresses no view regarding the merits, or lack thereof,
of any other claim which the plaintiff may have against any defendant or
potential defendant.
and remote byproducts of Big Rivers’ election to contract its
coal supply from E & M to the exclusion of Alley-Cassetty.
Assuming arguendo that the defendants, individually or in
tandem, had impinged RICO by corruptly prompting or
influencing Big Rivers to so assign Contract 589, the plaintiff
nonetheless can neither plead nor prove any proximately-
caused losses to itself, because all of its purported financial
disadvantages were incidental to those realized primarily by
intermediate parties, to wit, Alley-Cassetty and/or Big Rivers.
Hence, although the plaintiff may possess potential causes of
action against some, or all, of the defendants buttressed by
other legal rights or doctrines,11 it has no colorable RICO
claim against any defendant. On de novo consideration, the
plaintiff’s RICO cause (count one) is dismissed with
prejudice under Fed R. Civ. P. 12(b)(6) for failure to state a
claim; and the plaintiff’s three Kentucky law charges (counts
two, three, and four) are dismissed without prejudice, in the
exercise of the court’s discretion to decline supplemental
jurisdiction under 28 U.S.C. § 1367(a) & (c)(3), in the
absence of original federal jurisdiction over any pending
claim following the dismissal of count one.
Thus, the district court’s judgment of June 18, 1998 is
AFFIRMED.
No. 98-5974 Pik-Coal Co. v. Big Rivers
Electric Corp., et al.
3
2The Sixth Circuit has pronounced:
Whether a district court has correctly dismissed a suit
pursuant to Fed. R. Civ. P. 12(b)(6) [failure to state a claim] is
a question of law, and therefore subject to de novo review. The
district court must construe the complaint in a light most
favorable to the plaintiff, accept all of the factual allegations as
true, and determine whether the plaintiff undoubtedly can prove
no set of facts in support of his claims that would entitle him to
relief. When an allegation is capable of more than one
inference, it must be construed in the plaintiff's favor. Hence, a
judge may not grant a Rule 12(b)(6) motion based on a disbelief
of a complaint’s factual allegations.
Columbia Natural Resources, Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir.
1995) (citations omitted).
Accordingly, this appellate forum expresses no view regarding the
truthfulness or accuracy of any allegation related in this decision.
Pritchett (“Pritchett”). The plaintiff’s complaint had alleged
that various actions taken by the defendants, individually or
in concert with others, dispossessed it of certain contractual
coal brokerage commissions, in purported violation of the
Racketeer Influenced and Corrupt Organizations Act, 18
U.S.C. §§ 1961-1968 (“RICO”), as well as Kentucky law.
This reviewing court has presumed that the plaintiff’s
allegations are true upon plenary scrutiny of the lower court’s
dismissal of count one of the amended complaint for failure
to state a claim.2 The plaintiff has alleged that, during
October 1978 [1979?], Big Rivers, the owner and operator of
electrical power plants located in western Kentucky, issued a
public solicitation for bids on “Contract 589,” a long term
coal supply contract. In response, several coal brokers
submitted sealed competitive bids. The bid of Alley-Cassetty
Coal Company (“Alley-Cassetty”) was the lowest.
Apparently assuming that Big Rivers’ consequent award of
Contract 589 to Alley-Cassetty was inevitable, the plaintiff,
on November 8, 1979, executed a written contract with Solar,
the owner and operator of coal mines located in Indiana,

-- 3 of 8 --

4 Pik-Coal Co. v. Big Rivers
Electric Corp., et al.
No. 98-5974
3The November 8, 1979 memorial between Pik and Solar posited that
Pik “now has in hand certain coal sale orders, which orders can be filled
from SOLAR mines,” although it did not specifically mention the Alley-
Cassetty bid on Contract 589; that “[t]his agreement is not an exclusive
sale agreement” and thus “PIK-COAL may sell coal for other parties and
SOLAR may sell its coal through other parties;” but that Pik nonetheless
shall have an exclusive right to “represent” Solar’s coal sales to Big
Rivers for a six month period “and so long thereafter as any orders or
contracts are in force, including any extension or renewal thereof.”
Although the precise stipulations of the written compact between Pik and
Solar, when considered together, were ambiguous regarding the precise
rights and obligations of the signatories (and neither the written contract
itself nor the amended complaint revealed which party had drafted that
writing), the allegations of Pik’s amended complaint, as well as the
assertions contained within its appellant’s brief, unambiguously reflected
Pik’s hypothesis that it was deprived of commissions under its contract
with Solar solely because Big Rivers awarded Contract 589 to E & M
rather than Alley-Cassetty, as evolved below. Stated differently, the
plaintiff has theorized that its contractual entitlement to sales commissions
from Solar was contingent upon Big Rivers’ award of Contract 589 to
Alley-Cassetty.
under the terms of which the plaintiff would have the
exclusive right to “represent” Solar’s sale of coal to Big
Rivers "for a period of six (6) months and so long as any
orders or contracts are in force, including any extension or
renewal thereof."
The contract between Pik and Solar did not allude to the
Alley-Cassetty bid, however, the parties apparently intended
that Pik would act as the broker for Solar’s coal furnished to
Big Rivers to satisfy Alley-Cassetty’s supply obligations to
Big Rivers following Big Rivers’ anticipated acceptance of
Alley-Cassetty’s low bid on Contract 589. Pik also mediated
a separate understanding between Solar and Alley-Cassetty
whereby Solar would supply Big Rivers with the coal required
by Contract 589 if Big Rivers awarded that contract to Alley-
Cassetty.3 The Pik/Solar agreement required Solar to pay Pik
six percent (6%) of the purchase price (F.O.B. mine) of all
coal sold by Solar to Big Rivers during the contractual period.
No. 98-5974 Pik-Coal Co. v. Big Rivers
Electric Corp., et al.
13
would have earned if Alley-Cassetty had attained Contract 589. The
plaintiff’s cryptic conspiracy allegation, which in its entirety recited that
“[t]he defendants conspired to violate 18 U.S.C. § 1962(c) in violation of
18 U.S.C. § 1962(d)," omitted essential allegations detailing an agreement
to jointly undertake specific actions illegalized by RICO. See Craighead
v. E.F. Hutton & Co., Inc., 899 F.2d 485, 495 (6th Cir. 1990) (remarking
that a RICO conspiracy count must plead an agreement to engage in
specified conduct which would violate RICO ).
Moreover, the amended complaint was devoid of any allegation that
Solar, either acting solo or in conjunction with any other defendant(s),
had engaged in a pattern of racketeering activity, even assuming
arguendo that it contained allegations of racketeering acts by Solar. See
18 U.S.C. § 1962(c) (illegalizing the conduct of an interstate enterprise
through a “pattern of racketeering activity”); 18 U.S.C. § 1961(5)
(defining a “pattern of racketeering activity” to consist of at least two acts
of racketeering). A “pattern of racketeering activity”requires related
predicate acts of racketeering which continued during a substantial period
or which by their nature forebode of future criminal conduct. H.J. Inc. v.
Northwestern Bell Telephone Co., 492 U.S. 229, 240-43 (1989). See also
Saglioccolo v. Eagle Ins. Co., 112 F.3d 226, 230 (6th Cir. 1997)
(concluding that alleged acts of racketeering which occurred within one
month were insufficient to constitute a pattern); Vemco, Inc. v.
Camardella, 23 F.3d 129, 134 (6th Cir. 1994) (ruling activities which
transpired within a seventeen month span inadequate to comprise a
"pattern of racketeering activity"); Vild v. Visconsi, 956 F.3d 560, 569
(6th Cir. 1992) (characterizing "a few months" of racketeering activity as
insufficient to create a continuous "pattern"). In the action sub judice, the
amended complaint merely charged that, on a single day (December 28,
1979), Solar placed two telephone calls – one to Pik, by which it
purported to cancel the agreement under which Pik would supply the
embryonic Big Rivers/Alley-Cassetty “contract” with Solar’s coal; and
one to a truck driver who was not even a Pik employee, by which it
allegedly “threatened” him to prevent his haulage of Solar coal “to supply
the contract [sic] with Alley-Cassetty.” RICO incorporates, inter alia,
acts illegalized by 18 U.S.C. § 1343 (the federal criminal wire fraud
statute) and 18 U.S.C. § 1951 (the federal criminal commercial extortion
statute) within its definition of “racketeering activity.” 18 U.S.C.
§ 1961(1). Even if, as contended by the plaintiff, those two averred
telephonic communications could be construed as potentially criminalized
by sections 1343 and/or 1951 (which is highly doubtful), Pik has, beyond
controversy, failed to allege a sufficient RICO “pattern” of such offenses.
Accordingly, Pik’s alleged economic injuries were indirect

-- 4 of 8 --

12 Pik-Coal Co. v. Big Rivers
Electric Corp., et al.
No. 98-5974
9As developed above, Pik’s amended complaint alleged that it had
arranged a deal between Solar and Alley-Cassetty whereby Solar would
supply Alley-Cassetty, and in turn Big Rivers, with coal as required under
Contract 589. However, Pik did not aver that it had commenced any
contractual relationship with Alley-Cassetty. In any event, an allegation
by Pik that it had a direct contractual relationship with Alley-Cassetty
would not have altered the result herein, because Pik’s pleaded injuries
would remain secondary to losses suffered by Alley-Cassetty allegedly
caused by the defendants’ charged RICO offenses.
10Although Pik alleged that it had a direct contractual relationship
with Solar, it has failed to aver any damages directly suffered by it as the
result of any conduct by Solar which arguably infringed RICO strictures.
Instead, it has merely alleged that it ultimately suffered remote losses
because Solar vended coal to Big Rivers via E & M rather than Alley-
Cassetty, which deprived Pik of the six percent commission on all Solar
coal distributed to Big Rivers during at least a six month term which it
agents and alleged co-conspirators caused it to award Contract
589 to an averredly economically unstable enterprise, namely
defendant E & M; which in turn harmed Alley-Cassetty
financially by forestalling Big Rivers from granting it
Contract 589 irrespective of its initially attractive proposal.
Pik had not executed a written contract with either Big
Rivers or Alley-Cassetty; rather, it had merely agreed with
Solar to “represent” its sale of coal to Big Rivers, subject to
conditions, during a specified six month term.9 The
plaintiff’s alleged losses were caused by Big Rivers’ failure
to purchase Solar coal during the six month period of the
Pik/Solar contract because Big Rivers elected not to award
Contract 589 to Alley-Cassetty. Hence, because Pik had
brokered the deal between Alley-Cassetty and Solar upon the
assumption that Big Rivers would confer Contract 589 upon
Alley-Cassetty, whereas ultimately Big Rivers invested that
opportunity in E & M rather than Alley-Cassetty, Pik was (at
most) indirectly divested, by the defendants’ alleged conduct,
of inchoate commission rights which it would have possessed
under its contract with Solar if Alley-Cassetty had received
Contract 589.10
No. 98-5974 Pik-Coal Co. v. Big Rivers
Electric Corp., et al.
5
4Defendant Brown allegedly was "the ultimate beneficial owner" of
defendants E & M, Embro Holdings, and Rose Brothers Trucking.
Accordingly, those litigants are sometimes collectively referenced herein
as “the Brown defendants.”
However, Big Rivers ultimately did not accept Alley-
Cassetty’s offer. Instead, in September 1980, it awarded
Contract 589 to defendants Brown and E & M.4 The plaintiff
has charged that Brown secured Contract 589 by means of
illegal bribes, delivered via the United States mail, to certain
employees of Big Rivers, including defendants Thorpe and
Pritchett. In exchange for illicit payments, a Big Rivers
manager allegedly funneled confidential and proprietary
inside information, including the terms of Alley-Cassetty’s
coal supply proposal, to the Brown defendants. Using that
illegally obtained intelligence, coupled with the favorable
influence of corrupted Big Rivers employees, the Brown
defendants allegedly deprived Alley-Cassetty of Contract 589,
which in turn divested Pik of commissions which it would
have earned by virtue of its written agreement with Solar
contingent upon Alley-Cassetty’s attainment of Contract 589.
Pik averred that, between December 20 and 27, 1979, Solar
had shipped quantities of coal to Big Rivers in apparent
partial performance of Alley-Cassetty’s putative obligations
under its submitted but as-yet-unaccepted coal supply
proposal. However, on or about December 28, 1979, a Solar
representative telephoned Pik to “cancel” the November 8,
1979 Pik/Solar agreement. On that same day, a Solar
employee purportedly threatened, via telephone, a coal hauler,
with the intent of restraining him from transporting coal from
Solar’s mines in ostensible satisfaction of the incipient but
unconsummated contract between Alley-Cassetty and Big
Rivers.
In all events, the Pik/Solar contract’s six month term
expired on May 8, 1980. After that date, on June 16, 1980,
Brown, as principal of E & M, secretly submitted a formal
coal supply proposal to Big Rivers which underbid the

-- 5 of 8 --

6 Pik-Coal Co. v. Big Rivers
Electric Corp., et al.
No. 98-5974
standing Alley-Cassetty offer. On September 16, 1980, Big
Rivers accepted the E & M bid, despite E & M’s averred poor
contemporaneous financial condition. E & M subsequently
discharged its coal supply commitments to Big Rivers by
acquiring coal from Solar’s mines. Naturally, because Pik
had no contractual relationship with Solar after May 1980, it
received no commissions for those sales. The Brown
defendants’ alleged mail frauds, briberies, and kickbacks
continued between 1980 and 1992, during which period they
allegedly continued to financially influence employees of Big
Rivers to award additional coal purchase contracts to them.
The plaintiff initially learned of the subject corrupt
arrangements in 1993, following publication by the Kentucky
Public Service Commission of an investigatory audit report
which examined Big Rivers’ business activities and practices
spanning late 1979 through 1992.
On March 16, 1994, Pik inaugurated the instant action via
a four-count complaint in federal district court which charged
(1) a RICO conspiracy against all defendants by which they
deprived the plaintiff of sales commissions which it would
have earned under its November 8, 1979 agreement with
Solar if Big Rivers had awarded Contract 589 to Alley-
Cassetty instead of E & M (count one), (2) Kentucky law
breach of contract against Solar (count two), (3) state law
tortious interference with its contractual relations with Solar
against all defendants except Solar (count three), and (4)
Kentucky law fraud against Big Rivers (count four). The
plaintiff requested compensatory damages in excess of $1
million on each cause, plus treble damages on count one; as
well as legal interest, costs, and attorney fees. On May 28,
1996, the district court sustained Solar’s petition to dismiss
count one for failure to assert a valid claim, ruling that Pik
had neglected to adequately allege that Solar had committed
any predicate act of racketeering or that it had conspired with
any co-defendant to commit a predicate act of racketeering.
18 U.S.C. §§ 1961(1) & (5), 1962. On June 13, 1996, the trial
forum granted the plaintiff leave to file an amended
complaint. On July 9, 1996, the plaintiff lodged its four-count
No. 98-5974 Pik-Coal Co. v. Big Rivers
Electric Corp., et al.
11
8Following Holmes, the Sixth Circuit reiterated that a civil RICO
claimant must allege and prove that it realized damages directly caused by
the defendants’ conduct violative of RICO; mere “but for” injuries
consequent to intervening losses directly caused to another party are
insufficient. See, e.g., Firestone v. Galbreath, 976 F.2d 279, 285 (6th
Cir. 1992) (affirming the district court's dismissal of a count instigated by
the heirs of a decedent which alleged that the defendants had committed
RICO offenses against the decedent which diminished the value of the
decedent's estate, ruling that, because the estate was the party primarily
injured by the charged conduct, the alleged harm to the plaintiffs as
beneficiaries of that estate was indirect and thus not proximate even if
they suffered actual "but for" monetary losses); Sanders Confectionary
Products, Inc. v. Heller Financial, Inc., 973 F.2d 474, 487 (6th Cir. 1992)
(sustaining the trial court's resolution that, because the defendant’s
alleged RICO violations which caused a diminution in the value of
corporate shares directly harmed the corporation, an injured owner of
shares of the company’s devalued stock lacked standing to sue those
defendants under RICO because its damages were non-proximate).
suffered by the broker-dealers. That is, the conspirators
have allegedly injured these customers only insofar as the
stock manipulation first injured the broker-dealers and
left them without the wherewithal to pay customers'
claims. . . . The broker-dealers simply cannot pay their
bills, and only that intervening insolvency connects the
conspirators' acts to the losses suffered by the
nonpurchasing customers and general creditors.
Id. at 271 (citing Associated General Contractors of Cal., Inc.
v. Carpenters, 459 U.S. 519, 534 (1983) (quoting Southern
Pacific Co. v. Darnell-Taenzer Lumber Co., 245 U.S. 531,
533 (1918) (per Holmes, J.) ("`The general tendency of the
law, in regard to damages at least, is not to go beyond the first
step.’")).
The logic of Holmes and its Sixth Circuit progeny8 compels
the conclusion that Pik’s instant RICO claims were not, and
could not be, supported by sufficiently proximate injuries. At
most, Pik has alleged, and could only allege, that the
defendants’ conspiratorial acts directly and proximately
injured Big Rivers because the corruption of that defendant’s

-- 6 of 8 --

10 Pik-Coal Co. v. Big Rivers
Electric Corp., et al.
No. 98-5974
can generally be counted on to vindicate the law as
private attorneys general, without any of the problems
attendant upon suits by plaintiffs injured more remotely.
Id. at 268-70. (Citations omitted; emphases added).
In Holmes, the defendant securities brokers/dealers
fraudulently manipulated certain stock prices, which
ultimately caused numerous investors to suffer damages.
Concurrently, the defendant securities dealers themselves
incurred consequent financial losses which subsequently
disabled them from satisfying various obligations to their
clients and others. The Securities Investor Protection
Corporation (“SIPC”), a private nonprofit membership
corporation chartered by 15 U.S.C. § 78ccc(a)(1) to which the
defendants belonged by operation of 15 U.S.C.
§ 78ccc(a)(2)(A), ultimately satisfied its errant members’
undischarged financial commitments to their former
customers and general creditors, including erstwhile patrons
who had not purchased “watered” stock. Subsequently, the
SIPC claimed reimbursement of those expenditures from the
defendants, propped by securities fraud and RICO theories.
Holmes, 503 U.S. at 261-65 & n.7. Reversing the Ninth
Circuit, the Supreme Court sustained the district court’s
dismissal of RICO counts which sought recovery for
payments which the SIPC had made to the defendants’ former
clients who had not purchased artificially value-inflated
shares but instead had suffered losses, which the SIPC
eventually compensated, merely by reason of the defendants’
overall financial impairments caused by their unrelated
wrongful price manipulations of certain equities. See id. at
270. The Court anchored that ruling in the SIPC’s failure to
satisfy the proximate causation requirement. The Court
mandated:
[E]ven assuming, arguendo, that it [SIPC] may stand in
the shoes of nonpurchasing customers, the link is too
remote between the stock manipulation alleged and the
customers' harm, being purely contingent on the harm
No. 98-5974 Pik-Coal Co. v. Big Rivers
Electric Corp., et al.
7
5The material allegations against Solar which Pik had added by
amendment to paragraph 5 of count one recited:
(a) On or about December 28, 1979, the defendant, Solar
Sources, Inc., for the purpose of executing a scheme or artifice
to defraud, made use of the telephone to call the plaintiff and
solicit its assistance in executing that scheme by canceling the
contractual agreement to supply Alley-Cassetty with the coal to
meet the contractual requirements of BREC [Big Rivers] in
violation of 18 U.S.C. § 1343.
(b) On or about December 28, 1979, the defendant, Solar
Sources, Inc., for the purpose of executing a scheme or artifice
to defraud, made use of the telephone to call Hurtis Gammon
and threaten him so as to prevent him from continuing to haul
coal from the mine of Solar Sources, inc. [sic] to supply the
contract with Alley-Cassetty in violation of 18 U.S.C. § 1343
and 18 U.S.C. § 1951.
(c) Despite the fact that it had shipped coal to BREC to
supply the Alley-Cassetty contract on December 20, 1979,
December 21, 1979, December 22, 1979, December 26, 1979,
and December 27, 1979, the defendant, Solar Sources, Inc.,
entered into an agreement with Brown to supply Brown and E &
M with the coal necessary to fulfill Contract No. 589 with BREC
without paying the plaintiff commissions on such sales due
under an agreement dated November 8, 1979, a copy of which
is attached hereto as Exhibit “A”.
amended complaint which, inter alia, incorporated new
allegations against Solar intended to correct the defects
identified in the trial bench’s May 28, 1996 order.5
On June 18, 1998, the trial court dismissed count one for
failure to state a claim against any defendant, reasoning that
Pik had alleged proximate injuries only to Big Rivers and/or
Alley-Cassetty but had failed to assert any direct damage to
itself caused by any defendant’s RICO infraction(s). See
Holmes v. Securities Investor Protection Corp., 503 U.S. 258
(1992). Additionally, the trial court declined to exercise
discretionary supplemental jurisdiction over the three pendent
state law claims, and accordingly struck the entire action from

-- 7 of 8 --

8 Pik-Coal Co. v. Big Rivers
Electric Corp., et al.
No. 98-5974
6The Brown defendants submitted a joint appellees’ brief herein on
November 12, 1998. Defendant Solar filed a separate appellee’s brief on
November 20, 1998. Defendant-appellees Thorpe and Pritchett petitioned
the instant bench on October 9, 1998, and October 13, 1998, respectively,
to adopt the opposition briefs of Solar and the Brown defendants. Those
motions are hereby granted.
7“A violation of RICO under 18 U.S.C. § 1962(c) requires (1)
conduct (2) of an enterprise (3) through a pattern (4) of racketeering
activity.” Kenty v. Bank One, Columbus, N.A., 92 F.3d 384, 389 (6th Cir.
1996) (citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985)).
its docket. 28 U.S.C. § 1367(a) & (c)(3). Pik noticed a
timely appeal6 on July 13, 1998.
The plaintiff has alleged that the defendants violated RICO
section 1962 ("Prohibited activities"), subparts (c) and (d),
which state:
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 or indirectly, in the
conduct of such enterprise's affairs through a pattern of
racketeering activity or collection of unlawful debt.7
18 U.S.C. § 1962(c).
It shall be unlawful for any person to conspire to
violate any of the provisions of subsection (a), (b), or (c)
of this section.
18 U.S.C. § 1962(d).
Section 1964 created civil remedies for RICO section 1962
infractions:
Any person injured in his business or property by
reason of a violation of section 1962 of this chapter may
sue therefor in any appropriate United States district
No. 98-5974 Pik-Coal Co. v. Big Rivers
Electric Corp., et al.
9
court and shall recover threefold the damages he sustains
and the cost of the suit, including a reasonable attorney's
fee . . . .
18 U.S.C. § 1964(c) (emphases added).
Accordingly, to sustain a RICO § 1962 civil treble damages
action against any defendant, a plaintiff must plead and prove
an actual injury to its business or property "by reason of" a
defendant’s section 1962 transgression. The Supreme Court,
in Holmes v. Securities Investor Protection Corp., 503 U.S.
258 (1992), dictated that mere allegation and/or evidence that
an injury to the plaintiff would not have occurred "but for" the
defendant's alleged RICO violation (that is, that the plaintiff
sustained a mere "injury in fact") is insufficient to establish
RICO causation. Id. at 265-68. Instead, the plaintiff must
plead and prove "proximate causation." The Court explained:
[A]mong the many shapes this concept [proximate
causation] took at common law was a demand for some
direct relation between the injury asserted and the
injurious conduct alleged. Thus, a plaintiff who
complained of harm flowing merely from the misfortunes
visited upon a third person by the defendant's acts was
generally said to stand at too remote a distance to
recover.
. . . . First, the less direct an injury is, the more
difficult it becomes to ascertain the amount of a
plaintiff's damages attributable to the violation, as
distinct from other, independent, factors. Second, quite
apart from problems of proving factual causation,
recognizing claims of the indirectly injured would force
courts to adopt complicated rules apportioning damages
among plaintiffs removed at different levels of injury
from the violative acts, to obviate the risk of multiple
recoveries. And, finally, the need to grapple with these
problems is simply unjustified by the general interest in
deterring injurious conduct, since directly injured victims

-- 8 of 8 --