John A. Begala , Steven W. Borchers, Cynthia Edwards v. Pnc Bank, Ohio , National Association

16 Begala, et al. v.
PNC Bank Ohio
Nos. 98-3360; 99-3652
CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the
district court.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0192P (6th Cir.)
File Name: 00a0192p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
J OHN A. BEGALA , S TEVEN W.
BORCHERS, C YNTHIA
EDWARDS,
Plaintiffs-Appellants,
v.
PNC BANK, OHIO , NATIONAL
ASSOCIATION ,
Defendant-Appellee.
;>

1
Nos. 98-3360;
99-3652
Appeal from the United States District Court
for the Southern District of Ohio at Cincinnati.
No. 97-00717—Sandra S. Beckwith, District Judge.
Argued: February 3, 2000
Decided and Filed: June 7, 2000
Before: WELLFORD, BATCHELDER, and
DAUGHTREY, Circuit Judges.
_________________
COUNSEL
ARGUED: Paul M. De Marco, WAITE, SCHNEIDER,
BAYLESS & CHESLEY, Cincinnati, Ohio, for Appellants.
Glenn V. Whitaker, VORYS, SATER, SEYMOUR &

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2 Begala, et al. v.
PNC Bank Ohio
Nos. 98-3360; 99-3652
1The district court evaluated the sufficiency of plaintiff’s federal
claims only. The pendent state law claims were then dismissed with the
federal claims because the court declined to exercise supplemental
jurisdiction over the state claims.
PEASE, Cincinnati, Ohio, for Appellee. ON BRIEF: Paul
M. De Marco, WAITE, SCHNEIDER, BAYLESS &
CHESLEY, Cincinnati, Ohio, for Appellants. Glenn V.
Whitaker, Phillip J. Smith, VORYS, SATER, SEYMOUR &
PEASE, Cincinnati, Ohio, for Appellee.
_________________
OPINION
_________________
ALICE M. BATCHELDER, Circuit Judge. Plaintiff John
Begala filed his first lawsuit against PNC Bank on January
23, 1997. The lawsuit was based upon allegations that PNC
violated the Truth-in-Lending Act (“TILA”), 15 U.S.C. §1601
et seq., as well as various state laws by offering “payment
holidays” to its loan customers without fully disclosing the
additional interest that those customers would incur by
accepting PNC’s offer. Defendant PNC sought dismissal
under Fed. R. Civ. P. 12(b)(6), and the district court
dismissed plaintiff’s TILA claims on July 30, 1997.1 Begala
brought a timely appeal and we affirmed the district court’s
decision on December 28, 1998. See Begala v. PNC Bank
(Begala I), 163 F.3d 948 (6th Cir. 1998), cert. denied, 120
S.Ct. 166 (1999).
Begala again filed suit against PNC in the same federal
court on August 5, 1997, while the appeal in Begala I was
still pending. In the second suit, Begala alleged the same
facts he had pled in Begala I, but this time he alleged
violations not only of TILA and the same assortment of state
laws but also the Racketeer Influenced and Corrupt
Organizations Act (“RICO”), 18 U.S.C. §1962, and the
National Bank Act (“NBA”), 12 U.S.C. §§ 85 and 86. PNC
Nos. 98-3360; 99-3652 Begala, et al. v.
PNC Bank Ohio
15
In short, the Court did not permit Plaintiffs to amend
the complaint because they did not move to do so.
(Emphasis added.)
Plaintiffs argued in their brief that “there was no
justification for denying plaintiffs the right to amend.” The
motion for clarification, as pointed out by the district court,
was not a motion to amend; it was an effort to obtain an
advisory opinion from the court. Plaintiffs state in their brief
in Case No. 98-3360 that they “were never given an
opportunity to further clarify their allegations with evidence.”
(Br. at 24.) Of course, the granting of a defendant’s motion
to dismiss does not ordinarily afford the unsuccessful
plaintiffs any “opportunity to further clarify their allegations”
with proof and evidence. What plaintiffs may have stated,
almost as an aside, to the district court in a memorandum in
opposition to the defendant’s motion to dismiss is also not a
motion to amend.
The district court did not err or abuse its discretion in
denying the post-judgment action of plaintiffs (post notice of
appeal) which they characterize as their attempt “to obtain,
via the procedure outlined in First National Bank of Salem v.
Hirsch, 535 F.2d 343 (6th Cir. 1976), the right to amend they
have sought and still seek.” As pointed out by defendant in
response, this was a second lawsuit by plaintiffs’ lawyers
“arising out of the same factual allegations.” This effort, in
our view, was also a second effort to relitigate that which
might have been asserted in a complaint, a proposed amended
complaint, or in a formal motion to amend prior to an adverse
judgment and certainly before filing of a notice of appeal. We
do not believe that Hirsch constitutes authority to find the
district court’s decisions to be erroneous nor a basis for a new
round of allegations based upon the same factual scenario
which resulted in our first decision found in Begala I, 163
F.3d at 948.

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14 Begala, et al. v.
PNC Bank Ohio
Nos. 98-3360; 99-3652
The district court, on April 13, 1998, ten days after a notice
of appeal had been filed, set out appropriate light on its
actions in denying this motion:
The purpose of the motion for clarification is, apparently,
to learn whether the Court would have granted the
motions to dismiss had Plaintiffs amended the complaint
to add certain allegations. For the reasons that follow,
the motion (Doc 28) is DENIED.
Plaintiffs contend, in their current motion and the reply
memorandum in support thereof, that they requested
leave to amend the complaint and that the Court should
have granted them permission to do so instead of
granting Defendant’s motions to dismiss. A review of
the docket in this matter reveals that Plaintiffs never
moved for leave to amend their complaint. Rather, in
opposition to the motions to dismiss, Plaintiffs requested
that they be permitted to amend the complaint in the
event that the Court found it to be deficient.
. . . An open request for the Court to permit
amendment to cure deficiencies, once the Court identifies
those deficiencies, will not defeat a meritorious motion
to dismiss pursuant to Rule 12(b)(6). Had plaintiffs filed
a motion to amend the complaint prior to this Court’s
consideration of the motions to dismiss and accompanied
that motion with a memorandum identifying the
proposed amendments, the Court would have considered
the motions to dismiss in light of the proposed
amendments to the complaint. The Court would not have
dismissed this action had it been convinced that the
deficiencies in the complaint would have been cured by
the proposed amendments. Absent such a motion,
however, Defendant was entitled to a review of the
complaint as filed pursuant to Rule 12(b)(6). Plaintiffs
were not entitled to an advisory opinion from the Court
informing them of the deficiencies of the complaint and
then an opportunity to cure those deficiencies.
Nos. 98-3360; 99-3652 Begala, et al. v.
PNC Bank Ohio
3
2As in Begala I, the district court evaluated the sufficiency of
plaintiffs’ federal claims only. The pendent state law claims were then
dismissed with the federal claims because the court declined to exercise
supplemental jurisdiction over the state claims.
again moved for dismissal arguing that the duplicative claims
in second suit were barred by res judicata and that the new
claims failed to state a claim upon which relief could be
granted under Fed. R. Civ. P. 12(b)(6). In response to PNC’s
motion, Begala amended his complaint to add two new
plaintiffs, Stephen Borchers and Cynthia Edwards. PNC
countered by again moving to dismiss the amended complaint
citing res judicata and failure to state a claim under
Fed. R. Civ. P. 12(b)(6).
On March 6, 1998, the district court dismissed all of
plaintiffs’ federal claims, finding that Begala’s individual
claims were barred by the doctrine of res judicata and that the
remaining claims were insufficient under Fed. R. Civ. P.
12(b)(6).2 Plaintiffs took a two-fold approach to attacking
that decision. First, they filed a timely notice of appeal from
the order dismissing their claims. Second, they sought
clarification of the order by the district court under
Fed. R. Civ. P. 60(b) on the issue of whether the plaintiffs
would be allowed to amend their complaint. The district
court denied the plaintiffs’ motion for clarification on April
9, 1999, and plaintiffs’ sought a timely appeal from the April
9th order as well. The appeals have been consolidated for
consideration by this Court.
I. FACTUAL BACKGROUND
The facts in this case are generally undisputed. Plaintiffs
Begala, Borchers and Edwards all took out installment loans
with PNC’s predecessor in interest. After PNC acquired the
loans, PNC sent periodic letters to these (and other similar)
debtors offering a “payment holiday.” The terms of the letter
indicated that the customer would be allowed to skip a
payment now in return for the customer’s agreement (1) to

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4 Begala, et al. v.
PNC Bank Ohio
Nos. 98-3360; 99-3652
3PNC’s offer of payment holiday to John Begala on May 21, 1993
follows:
PNC Bank would like to help you accumulate some extra
cash during the vacation season by giving you an opportunity to
postpone one loan payment.
Here’s how it works. The authorization form attached
below lists a loan extension fee, which is the payment you make
now in order to postpone your regular payment. Simply sign the
authorization and forward it along with your extension fee
payment. Your loan term will automatically be extended by the
one payment you’re postponing now.
That’s all there is to it. This offer is good until July 31,
1993 so you can postpone your June or July payment.
If you’d like to take advantage of this offer, here’s your
chance. Remember, just sign and detach the authorization
provided below and return it with your extension payment in the
enclosed envelope. We must receive your authorization and
extension payment prior to your regular payment due date in the
month during which you wish to postpone a payment.
If you have any questions regarding this offer please call
651-TALK.
pay an “extension fee” in place of the monthly payment and
(2) to pay an additional payment at the end of the loan.3
The plaintiffs each allege that when the time came to pay
off their respective loans, they were unfairly surprised to
discover that they had incurred additional interest charges. In
addition, plaintiff Borchers alleges that a “payment holiday”
was imposed upon him by PNC without his explicit
authorization. The plaintiffs allege that this practice of
offering payment holidays without fully disclosing the
additional fees and interest charges incurred violates federal
law, specifically TILA, RICO and NBA. With the exception
of the unauthorized payment holiday allegation, PNC
generally does not dispute the facts as alleged, but rather
claims its practice does not violate any laws.
Nos. 98-3360; 99-3652 Begala, et al. v.
PNC Bank Ohio
13
For each of the loans at issue, PNC made one initial
advancement of funds. There is no question that this action
constituted a “loan made” as that term is used in Ohio
Revised Code §§ 1151.21 and 1161.28. The plaintiffs
participated in payment holidays that were not new credit
transactions, but simply an increase of fees and interest on
that original loan made. Because in Ohio selected banks can
charge unlimited fees and interest on loans made, the
additional fees and interest charged to the plaintiffs by PNC
do not violate the NBA. Plaintiffs’ complaint failed to state
a cause of action upon which relief can be granted, and their
claims under the NBA were properly dismissed.
E. Mr. Borcher’s Unauthorized Payment Holiday Claim
The district court analyzed each allegation in plaintiffs’
complaint, but did not explicitly discuss Mr. Borcher’s
unauthorized payment holiday claim. The district court
apparently viewed the narrow allegation that PNC Bank
imposed a payment holiday upon Mr. Borcher without his
authorization as a claim sounding in state law and dismissed
it with the plaintiffs’ other state law claims. We think the
district court’s view was sound. However, to the extent that
Mr. Borcher’s claim might be argued as stating a cause of
action under federal law, we have reviewed the applicable
provisions of TILA and NBA and conclude that Mr.
Borcher’s allegation has no basis in federal law and is a state
law claim only. Therefore, this claim was also properly
dismissed by the district court.
F. Request to Amend Complaint
In connection with their failed RICO claim, plaintiffs argue
on appeal that the district court erred in refusing to allow
them to amend their complaint. We review for abuse of
discretion a district court's denial of a motion to amend. See
LRL Properties v. Portage Metro Housing Auth., 55 F.3d
1097, 1104 (6th Cir.1995).

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12 Begala, et al. v.
PNC Bank Ohio
Nos. 98-3360; 99-3652
4The Kenty decision considered the question, raised by the parties,
of whether the advancement of funds to pay the debtors’ insurance
premiums was a forebearance under Ohio Revised Code § 1343.01, rather
than a loan made. However, as Judge Merritt plainly recognized, Ohio
Revised Code §1343.01 does not apply to the lending practices of banks
in Ohio. See Gross v. Standard Oil Co., 345 N.E.2d 89, 91 (Ohio Ct.
Common Pleas 1976) (recognizing that credit transactions with banking
institutions are governed by Chapter 11 of the Ohio Revised Code while
credit transactions entered into with other entities are governed by
Chapter 13 of the Ohio Revised Code).
charges did not violate the NBA. The Kenty court agreed
with the bank and concluded that advancing funds to pay the
insurance premiums constituted a “loan made.” See Kenty, 92
F.3d at 393-4.
Plaintiffs misread Kenty to require that additional interest
charges must be part of a new loan made before a national
bank may charge unlimited interest. Kenty did not so hold.
Kenty merely recognized that for the unlimited interest
provisions of Ohio Revised Code §§ 1151.21 and 1161.28 to
be applicable, the interest must be charged as part of a “loan
made.” The significant issue before the Kenty court was
whether the additional funds advanced by the bank to pay the
debtors’ car insurance premiums were “loans made.”4
In this case, PNC bank offered payment holidays that
allowed the debtors to defer a regular loan payment by paying
an extension fee and then making up the payment at the end
of the loan. We specifically held in Begala I that these
payment deferrals were not new credit transactions. See
Begala I, 163 F.3d at 951. Plaintiffs’ costs associated with
their loans did, of course, increase because the plaintiffs chose
to extend their payment terms. But, as there was no
additional advancement of funds, i.e., no increase in the
principal amount of the plaintiffs’ loans, Kenty’s analysis to
determine whether an additional advancement of funds
constituted a “loan made” is inapplicable to this case.
Nos. 98-3360; 99-3652 Begala, et al. v.
PNC Bank Ohio
5
II. ANALYSIS
We review de novo a district court's dismissal for failure to
state a claim. Sistrunk v. City of Strongsville, 99 F.3d 194,
197 (6th Cir. 1996). To survive a motion to dismiss under
Fed. R. Civ. P. 12(b)(6), a "complaint must contain either
direct or inferential allegations respecting all the material
elements to sustain a recovery under some viable legal
theory." Scheid v. Fanny Farmer Candy Shops, Inc., 859
F.2d 434, 436 (6th Cir. 1988) (internal quotation marks and
citations omitted).
We must treat as true all of the well-pleaded allegations
of the complaint. All allegations must be construed in
the light most favorable to the plaintiff. In order for a
dismissal to be proper, it must appear beyond doubt that
the plaintiff would not be able to recover under any set of
facts that could be presented consistent with the
allegations of the complaint.
Bower v. Federal Express Corp., 96 F.3d 200, 203 (6th Cir.
1996) (citations omitted). "Although this standard for Rule
12(b)(6) dismissals is quite liberal, more than bare assertions
of legal conclusions is ordinarily required to satisfy federal
notice pleading requirements." Scheid, 859 F.2d at 436
(citing 5A C. WRIGHT & A. MILLER, FEDERAL
PRACTICE & PROCEDURE § 1357, at 596 (1969)). In
addition, we review de novo district court dismissals of cases
on res judicata grounds. Gargallo v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 918 F.2d 658 (6th Cir. 1990).
A. RES JUDICATA
The district court concluded that named-plaintiff Begala’s
individual federal claims in this action were barred by res
judicata because the claims of Begala I were dismissed under
Fed. R. Civ. P. 12(b)(6) and Begala simply reasserted the
same facts in the present lawsuit. The doctrine of res judicata
has four elements:

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6 Begala, et al. v.
PNC Bank Ohio
Nos. 98-3360; 99-3652
1. A final decision on the merits in the first action
by a court of competent jurisdiction;
2. The second action involves the same parties, or
their privies, as the first;
3. The second action raises an issue actually
litigated or which should have been litigated in
the first action;
4. An identity of the causes of action.
Sanders Confectionary Prods., Inc. v. Heller Financial, Inc.,
973 F.2d 474, 480 (6th Cir. 1992).
Begala’s individual claims, previously dismissed by a court
of competent jurisdiction, make essentially the same factual
allegations between the same parties as did his claims in
Begala I; therefore, his individual claims are precluded. See
City of Canton v. Maynard, 766 F.2d 236, 239 (6th Cir. 1985)
(per curiam) (affirming district court’s 12(b)(6) dismissal of
cause of action under principles of res judicata). Begala tries
to distinguish this suit from Begala I by arguing that while the
claims in the first lawsuit were limited to PNC’s activities in
carrying out its payment holiday program, the second lawsuit
challenges the entire scheme of PNC in association with other
entities to impose, collect, and cover up unlawful charges.
This is a meaningless distinction. The payment holidays
Begala challenged without success in Begala I are the same
payment holidays at issue here. The law does not allow
Begala the luxury of returning to federal court with the same
set of facts until he succeeds in alleging a federal cause of
action. See Sanders, 973 F.2d at 484 (“Identity of causes of
action means an ‘identity of the facts creating the right of
action and of the evidence necessary to sustain each
action.’”); see also Federated Dep’t Stores, Inc. v. Moitie,
452 U.S. 394, 401-2 (1981) (explaining that res judicata is
animated by principles of finality rather than by concerns of
individual equity).
Nos. 98-3360; 99-3652 Begala, et al. v.
PNC Bank Ohio
11
Any association may take, receive, reserve, and charge on
any loan or discount made, or upon any notes, bills of
exchange, or other evidences of debt, interest at the rate
allowed by the laws of the State . . . where the bank is
located . . . .
12 U.S.C. § 85. This statute has been interpreted by the
United Sates Supreme Court, under the Most Favored Lender
Doctrine, to allow banks to charge the rate allowed to the
"most favored lenders" under state law. Marquette Nat'l Bank
v. First of Omaha Serv. Corp., 439 U.S. 299, 314 n.26, (1978)
(citing 12 C.F.R. § 7.7310(a)). Therefore, the question
becomes one of Ohio state banking law, and the maximum
interest rate allowed to banks under Ohio law determines
whether PNC has charged excessive interest in this case. See
Kenty v. Bank One, Columbus, N.A., 92 F.3d 384, 393 (6th
Cir. 1996).
Ohio law allows “building and loan associations” as well as
“savings banks” to charge unlimited dues, fines, interest and
premiums on loans made. See O HIO R EV . C ODE ANN .
§§ 1151.21, 1161.28 (Anderson 1996). Therefore, under the
Most Favored Lender doctrine, PNC may also charge
unlimited interest on its loans made.
Plaintiffs rely heavily upon our earlier decision, Kenty v.
Bank One, Columbus, N.A., 92 F.3d 384 (6th Cir. 1996). In
Kenty, the plaintiffs obtained car loans from the defendant
national bank on the understanding that if they did not
purchase auto insurance, the bank would purchase it for them.
If the bank did purchase this insurance, the funds to pay the
insurance were advanced by the bank and then added to the
debtors’ loans. The Kenty plaintiffs claimed that adding the
premiums to their automobile loans constituted excessive
interest and violated federal law. The bank countered by
arguing that adding the premiums to the loan balance was an
advancement of funds that constituted “loans made” and
because the Most Favored Lender doctrine allowed the bank
to charge any amount of interest on its “loans made;” these

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10 Begala, et al. v.
PNC Bank Ohio
Nos. 98-3360; 99-3652
inference be drawn against Begala, the non-moving party.
Drawing that inference would violate established practice
under Fed. R. Civ. P. 12(b)(6) and the rule that RICO
pleadings are to be liberally construed. See United States v.
Qaoud, 777 F.2d 1105, 1116 (6th Cir. 1985).
Plaintiffs’ complaint is nonetheless defective because
plaintiffs have wholly failed to plead an association-in-fact.
A properly pled RICO claim must cogently allege activity
“that would show ongoing, coordinated behavior among the
defendants that would constitute an association-in-fact.”
Frank v. D’Ambrosi, 4 F.3d 1378, 1386 (6th Cir. 1993). In
this case, the complaint essentially lists a string of entities
allegedly comprising the enterprise, and then lists a string of
supposed racketeering activities in which the enterprise
purportedly engages. Although the plaintiff may allege the
separate elements of “enterprise” and “pattern of racketeering
activity” through the same facts, see Qaoud, 777 F.2d at 1115,
the complaint must contain facts suggesting that the behavior
of the listed entities is “coordinated” in such a way that they
function as a “continuing unit,” see Frank, 4 F.3d at 1386.
This complaint is entirely devoid of any such factual
allegations. Accordingly, plaintiffs have failed to state a
RICO claim, and the district court properly dismissed this
claim under Fed. R. Civ. P. 12(b)(6).
D. NBA
The plaintiffs contend that PNC violated the National Bank
Act (“NBA”) by charging excessive interest in connection
with the payment holidays. Because PNC is a nationally
chartered bank, it is governed by the NBA, 12 U.S.C. §§ 38
et seq. (1988). The NBA and its accompanying regulations
allow nationally chartered banks to charge interest up to the
maximum amount permitted to the most-favored
state-chartered banks in the state in which they are operating.
It provides in relevant part:
Nos. 98-3360; 99-3652 Begala, et al. v.
PNC Bank Ohio
7
B. TILA
Plaintiffs Borchers and Edwards claim that PNC violated its
duty under TILA to disclose the fact that additional finance
charges would be assessed due to the payment holidays, as
well as the amount of such charges. Begala made this very
argument in his first lawsuit. The district court dismissed it
for failure to state a claim, and we affirmed. See Begala I,
163 F.3d at 951-2. The only basis that plaintiffs advance for
distinguishing this action from the first lawsuit is an
allegation in which named-plaintiff Borchers claims that PNC
granted him a payment holiday on one occasion without his
authorization. Plaintiffs contend that this factual difference
brings the current action within the scope of Travis v.
Boulevard Bank, N.A., 880 F. Supp. 1226 (N.D. Ill. 1995), a
case which we distinguished but nevertheless spoke
approvingly of in affirming the dismissal of Begala I.
Specifically, we said of Travis:
In that case, the bank, without proper authorization,
procured insurance against Travis’s default and then
charged Travis for the premium payments. Faced with a
scenario in which the principal amount of a consumer’s
indebtedness was unilaterally increased by the lender, the
district court correctly concluded that the insurance
purchase “and the subsequent addition of the resulting
premiums to Plaintiffs’ existing indebtedness constituted
a new credit transaction.”
Begala I, 163 F.3d at 951 n.1.
Plaintiffs make much of the fact that PNC’s alleged actions,
like those of the bank in Travis, were unilateral. That,
however, is not the basis on which we distinguished Travis.
We held in Begala I that payment deferrals cannot be
construed as new credit transactions, and Travis was
distinguishable because the bank in that case had increased
the principal amount of the plaintiff’s indebtedness. See id.
In this case, there is no allegation that the principal amount of

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8 Begala, et al. v.
PNC Bank Ohio
Nos. 98-3360; 99-3652
the loans increased and, accordingly, no basis for
distinguishing the present case from Begala I. Thus, the
district court properly dismissed plaintiffs’ TILA claims.
C. RICO
Plaintiffs contend that PNC bank working in concert with
its affiliated agencies and others have violated federal law by
granting payment holidays and then collecting the additional
interest and fees from unsuspecting debtors. Specifically, the
ninth claim for relief in plaintiffs’ complaint reads in
pertinent part:
At all times relevant to this Complaint, Defendant PNC
Bank, Ohio, N.A., in conjunction with The Central Trust
Company, National Association, The Central
Bancorporation, Inc., PNC Financial Corp., New
Financial Corp., PNC Bank Corp., various affiliated
entities, agencies, accountants, legal counsel, dealers, and
John Doe(s) (hereinafter the “Enterprise”), was an
association-in-fact “enterprise” as that term is defined in
28 U.S.C. § 1961(4), engaged in and affecting interstate
commerce. The enterprise was and is engaged in
legitimate banking activities, in addition to the pattern of
racketeering activity and collection of unlawful debt
described below. In addition to defendant, the other
entities and persons comprising the enterprise facilitated
the racketeering activity by, inter alia, creating and/or
participating in the creation of, false, inaccurate,
misleading, and deceptive representations and
information concerning payment holidays, as alleged
herein; communicating, and/or participating in the
communication of, false, inaccurate, misleading, and
deceptive representations and information concerning
payment holidays, as alleged herein; disseminating and
transmitting, and/or participating in the dissemination
and transmission of, false, inaccurate, misleading, and
deceptive payment holiday solicitation letters and other
information related to payment holidays; demanding,
Nos. 98-3360; 99-3652 Begala, et al. v.
PNC Bank Ohio
9
communicating, collecting, and/or attempting to collect
fraudulent and unlawful charges related to payment
holidays; and interfering with credit and other financial
opportunities of customers who refused to pay charges
related to or resulting from payment holidays.
Under RICO, an enterprise is prohibited from engaging in
a coordinated effort to collect an unlawful debt. Specifically,
the RICO statute 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 or indirectly, in the
conduct of such enterprise’s affairs through a pattern of
racketeering activity or collection of unlawful debt.
18 U.S.C. § 1962(c).
Plaintiffs’ complaint fails adequately to allege the existence
of a RICO enterprise, although not entirely for the reasons
cited by the district court. The district court held that the
complaint had failed to allege an enterprise distinct from PNC
because all of the entities listed in the complaint were
subdivisions or agents of PNC. Under RICO, a corporation
cannot be both the "enterprise" and the "person" conducting
or participating in the affairs of that enterprise. See, e.g.,
Puckett v. Tennessee Eastman Co., 889 F.2d 1481, 1489 (6th
Cir. 1989). Under the "non-identity" or "distinctness"
requirement, a corporation may not be liable under section
1962(c) for participating in the affairs of an enterprise that
consists only of its own subdivisions, agents, or members. An
organization cannot join with its own members to undertake
regular corporate activity and thereby become an enterprise
distinct from itself. See United States v. Computer Sciences
Corp., 689 F.2d 1181, 1190 (4th Cir.1982).
It is not clear from the pleadings, however, that the
“dealers” (to take one example) are subdivisions, agents or
members of PNC, and to so conclude requires that an

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