Bonavitacola Electric Contractor, Inc. v. Boro Developers, Inc

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 03-1713
BONAVITACOLA ELECTRIC
CONTRACTOR, INC.;
LOCAL UNION NO. 654
INTERNATIONAL BROTHERHOOD
OF ELECTRICAL WORKERS;
LOCAL UNION NO. 98
INTERNATIONAL BROTHERHOOD
OF ELECTRICAL WORKERS;
CURTIS BELL
v.
BORO DEVELOPERS, INC;
FREDERICK J. SHAPIRO;
BRUCE H. SHAPIRO
Bonavitacola Electric Contractor;
Local Union No. 98, International
Brotherhood of Electrical Workers,
Appellants
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 01-cv-05508)
District Judge: Honorable Michael M. Baylson
Submitted Under Third Circuit LAR 34.1(a)
October 30, 2003
Before: SCIRICA, Chief Judge, NYGAARD and AMBRO, Circuit Judges

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1 For convenience we will use “Bonavitacola” as a collective reference to the four
plaintiff-appellants: Bonavitacola Electric Contractor; Local Union No. 654, International
Brotherhood of Electric Workers; Local Union No. 98, International Brotherhood of
Electric Workers; and Curtis Bell, an employee of Boro Developers, Inc.
2For convenience we will use “Boro” as a collective reference to the defendants-
appellees.
2
(Opinion filed December 8, 2003 )
OPINION
AM BRO, Circuit Judge
Bonavitacola Electric Contractor appeals the District Court’s order dismissing its
amended complaint for failing to state a claim under the Racketeer Influenced and
Corrupt Organizations Act, 18 U.S.C §§ 1961–68 (“RICO”). Because we conclude that
the amended complaint fails to allege sufficiently that the defendant committed a pattern
of racketeering activity as required under RICO and that the plaintiffs suffered direct
injury as a result, we affirm the judgment of the District Court.
I
Facts and Procedural Posture
On October 31, 2001, Bonavitacola Electric Contractor, along with two labor
unions and one individual,1 filed a 27-count complaint against a competitor electric
contractor, Boro Developers, Inc., and two of Boro’s officers-employees, Frank and
Bruce Shapiro.2 Bonavitacola alleged that, over a period of ten years, Boro submitted

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3Eight counts alleging violations of § 1962(d) of RICO were subsequently withdrawn
on July 1, 2002.
3
competitive bids to perform electrical work on public projects by the Ridley School
District, the Nashaminy School District, and the United States Department of the Navy.
Bonavitacola alleges that each of these three bids contained Boro’s “fraudulent” promise
to comply with prevailing wage law (the Pennsylvania Prevailing Wage Act, 43 Pa. Stat.
Ann. § 165-1, and the federal Davis-Bacon Act, 40 U.S.C. §§ 276 et seq.), and as a result
Boro was awarded each of the three contracts over Bonavitacola, the second highest
bidder. Bonavitacola further alleges that, in connection with each of the three projects,
Boro submitted numerous certified payroll reports (requirements under prevailing wage
law) that fraudulently misclassified certain employees’ activity as “labor” rather than
“electrical.” Bonavitacola generally alleges that Boro’s conduct involved “repeated” (but
unspecified) instances of mail fraud and wire fraud, which constitute a predicate act under
RICO. Bonavitacola and the labor unions brought 24 counts against Boro and the
Shapiros under §§ 1962(a), 1962(c), and 1962(d)3 of RICO as well as two counts under
state law. In addition, co-plaintiff Curtis Bell brought one count against Boro and the
Shapiros under state prevailing wage law.
In October 2002, Judge Baylson of the United States District Court for the Eastern
District of Pennsylvania granted Boro’s motion to dismiss Bonavitacola’s complaint. See
Bonavitacola Elec. Contractor, Inc. v. Boro Developers, Inc., No. CIV.A.01-5508, 2002

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WL 31388806 (E.D. Pa. Oct. 23, 2002) (“Bonavitacola I”). Specifically, the District
Court found that the complaint did not state a claim under RICO because it (1) did not
contain any specific allegation of acts of mail or wire fraud, (2) failed to explain how any
of the alleged acts by the defendants furthered the scheme to defraud or was incident to an
essential part of that scheme, and (3) contained insufficient evidence as to enterprise,
relatedness, and continuity. Id. *4. But the District Court also granted Bonavitacola
leave to amend the complaint, and, in the form of a detailed requirements for including a
“RICO Case Statement,” instructed Bonavitacola on filing a sufficient RICO complaint.
Id. *5.
Bonavitacola filed an Amended Complaint on November 11, 2002, but made very
few substantive changes from the original complaint. It added numerous subparagraphs
specifically identifying each of the various certified payroll reports that allegedly
misclassified the activities of either Curtis Bell or an “unnamed black male employee” as
“labor” rather than “electrical.” See Amended Complaint ¶¶ 42A(2) (a)–(aaaa),
42B(2)(a)–(y) and 42C(2)(a)–(p) (App. at A19–A44). Bonavitacola also added a brief
discussion of supplemental jurisdiction, removed the § 1962(d) Counts (XVI–XXIV) that
the parties had previously agreed to strike, and added an allegation (¶ 109) to Curtis
Bell’s state law claim (Count XVIII). But Bonavitacola did not include the RICO Case
Statement as the District Court had required.
In February 2003, the District Court granted Boro’s motion to dismiss the

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Amended Complaint under Federal Rule of Civil Procedure 12(b)(6). See Bonavitacola
Elec. Contractor, Inc. v. Boro Developers, Inc., No. CIV.A.01-5508, 2003 WL 329145
(E.D. Pa. Feb. 12, 2003) (“Bonavitacola II”). The District Court found that the Amended
Complaint sufficiently pled the element of “enterprise” required of a RICO complaint, but
that it failed to plead the predicate acts of mail and wire fraud with requisite particularity,
failed to plead that predicate acts formed a “pattern of racketeering activity,” and failed to
plead that Bonavitacola was injured as a direct result. The District Court also held that
Bonavitacola could not base its RICO claims on alleged violations of the Davis-Bacon
Act because it does not provide a private right of action. The District Court dismissed the
Amended Complaint’s RICO counts with prejudice and dismissed the state law counts
without prejudice. Bonavitacola appeals the District Court’s finding that the Amended
Complaint failed to plead predicate acts, pattern of racketeering activity, and injury.
II
Standard of Review
Our review of the order dismissing the Amended Complaint for failing to state a
claim under RICO is plenary. Bald Eagle Area Sch. Dist. v. Keystone Financial, Inc., 189
F.3d 321, 327 (3d Cir. 1999). In applying the same standard as the District Court, we will
construe the complaint liberally, take all material allegations as admitted, and draw all
reasonable inferences in favor of the plaintiffs. Id. “We will not affirm the dismissal
unless the plaintiffs could prove no set of facts that would entitle them to relief.” Id.
(citing Univ. of Maryland at Baltimore v. Peat, Marwick, Main & Co., 996 F.2d 1534,

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1537-38 (3d Cir. 1993)).
III
RICO Pleading Requirements
RICO provides a private civil action to recover treble damages for injuries
resulting from a defendant’s “racketeering activities” in violation of RICO’s substantive
provisions. 18 U.S.C. § 1964(c). Under one such substantive provision, it is unlawful to
conduct an enterprise through a pattern of racketeering activities. Id. § 1962(c). Under
another, it is unlawful to invest income derived from a pattern of racketeering activities.
Id. § 1962(a). To allege successfully a violation under either of these subsections, a
plaintiff must allege “(1) conduct (2) of an enterprise (3) through a pattern (4) of
racketeering activity” as well as an injury resulting from the conduct constituting a
violation. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985). “Racketeering
activity” means one of the various predicate acts identified in the statute, including acts
“indictable” under the federal mail and wire fraud statutes. 18 U.S.C. § 1961(1). When
fraud is the predicate act, the heightened pleading requirement of Federal Rule of Civil
Procedure 9(b) applies. Warden v. McLelland, 288 F.3d 105, 114 & n.6 (3d Cir. 2002).
A “pattern of racketeering activity means” at least two predicate acts that “are related and
that amount to or pose a threat of continued criminal activity.” H.J., Inc. v. Northwestern
Bell Tele. Co., 492 U.S. 229, 239 (1989).

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IV.
Analysis of the Amended Complaint
The District Court dismissed the Amended Complaint for failing to state a claim
under § 1962(a) and § 1962(c) of RICO. We agree with the District Court that the
Amended Complaint did not plead the predicate acts of mail and wire fraud with
particularity and did not adequately allege a “pattern of racketeering activity” that directly
resulted in Bonavitacola’s direct injury.
A. Predicate Act
Bonavitacola attempts to plead that Boro committed mail or wire fraud as a
predicate act to violations of RICO. Mail or wire fraud consists of (1) a scheme to
defraud, (2) use of the mail or interstate wires to further that scheme, and (3) fraudulent
intent. United States v. Pharis, 298 F.3d 228, 233 (3d Cir. 2002). When mail or wire
fraud is the predicate act to a RICO violation, the plaintiff must allege that mailings are
related to the underlying fraudulent scheme, even though mailings need not be an
essential element of the scheme and need not themselves contain any misrepresentations.
Tabas v. Tabas, 47 F.3d 1280, 1294 & n. 18 (3d Cir. 1995); Kehr Packages, Inc. v.
Fidelcor, Inc., 926 F.2d 1406, 1413 (3d Cir. 1991). Under Federal Rule of Civil
Procedure 9(b), the circumstances constituting fraud must be pleaded with particularity,
though fraudulent intent may be generally alleged. In the context of RICO mail fraud
allegations, this means that the complaint must “identify the purpose of the mailing within
the defendant’s fraudulent scheme and specify the fraudulent statement, the time, place,

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and speaker and content of the alleged misrepresentation.” Annulli v. Panikkar, 200 F.3d
189, 2001 n.10 (3d Cir. 1999). Put another way, the “who, what, when and where details
of the alleged fraud” are required. Allen Neurosurgical Assoc., Inc. v. Lehigh Valley
Health Network, No. CIV-A-99-4653, 2001 WL 41143 (E.D. Pa. Jan. 18, 2001).
The Amended Complaint alleges that “the defendant Boro Developers, Inc.
knowingly and repeatedly used the United States mails and/or interstate wire
transmissions in violation of 18 U.S.C.A. § 1341 and § 1343.” Amended Complaint ¶ 41.
The Amended Complaint also alleges that each of the three bids contained a fraudulent
promise to comply with prevailing wage law and that Boro falsified over one hundred
certified payroll reports in connection with the three contracts. But the Amended
Complaint does not identify any particular mail or wire transmissions or allege how any
mail or wire transmissions are connected to a fraudulent scheme.
Even if Bonavitacola had alleged in the Amended Complaint that the certified
payroll reports were the underlying U.S. mail or interstate wire transmissions, it is not at
all clear from the Amended Complaint how they relate to an underlying fraudulent
scheme. Bonavitacola alleges that the intent of the fraudulent scheme was “to obtain the
award of electrical contracts from the Ridley and Nashaminy School Districts and the
Department of the Navy.” Amended Complaint ¶ 41. But the Amended Complaint
contains no alleged facts connecting the certified payroll reports, which Boro submitted
after being awarded the contract, to the alleged purpose of the fraudulent scheme, which

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was to obtain the award of the contracts.
B. Pattern of Racketeering
To plead sufficiently the requisite “pattern of racketeering activity,” a RICO
plaintiff must allege predicate acts that are related and amount to or pose a threat of
continued criminal activity. H.J. Inc., 492 U.S. at 239.
1. Relatedness
Predicate acts are related if they “have the same or similar purposes, results,
participants, victims, or methods of commission, or otherwise are interrelated by
distinguishing characteristics and are not isolated events.” H.J. Inc., 492 U.S. at 240;
Tabas, 47 F.3d at 1292. In Kehr Packages, we observed that relatedness “will nearly
always be satisfied in cases alleging at least two acts of mail fraud stemming from the
same fraudulent transaction.” 926 F.2d at 1414; see also Banks v. Wolk, 918 F.2d 418,
422 (3d Cir. 1990) (unspecified acts of mail and wire fraud all related to a single real
estate transaction satisfied relatedness requirement).
As discussed above, the Amended Complaint fails to allege predicate acts of mail
or wire fraud. At best, the Amended Complaint alleges three separate fraudulent
transactions: the Ridley School District bid, the Nashaminy School District bid, and the
U.S. Navy bid, each of which contained the allegedly false promise to comply with
prevailing wage law. Each of those bids is related to the various, allegedly falsified
certified payroll reports prepared for the same project. See Kehr Packages, 926 F.2d at

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1415.
However, the Amended Complaint does not allege that the three fraudulent
transactions are related to each other. Bonavitacola ignored the District Court’s clear
instructions in Bonavitacola I to state in the Amended Complaint “how the alleged
predicate acts relate to each other as part of a common plan.” Bonavitacola I, at * 5.
Rather, Bonavitacola retained the initial complaint’s vague and conclusory allegations
that predicate acts of fraud were related by their similar purpose of procuring electrical
construction contracts. This is not an allegation of common plan, and without
more—such as allegations detailing the transactions’ similar results, participants, victims,
manner of commission, or other characteristics—will not satisfy the relatedness
requirement. H.J. Inc., 492 U.S. at 240.
2. Continuity
Continuity is “both a closed- and open-ended concept, referring either to a closed
period of repeated conduct or to past conduct that by its nature projects into the future
with a threat of repetition.” H.J., Inc., 492 U.S. at 241. For closed-ended continuity, a
RICO plaintiff must allege “a series of related predicates lasting a ‘substantial period of
time.’” Hughes v. Consol-Penn. Coal Co., 945 F.2d 594, 609 (3d Cir. 1991) (citing H.J.,
Inc., 492 U.S. at 242). For open-ended continuity, the plaintiff must allege a “threat of
continuity” that “exists when the predicate acts are a part of defendant’s ‘regular way of
doing business.’” Hughes, 945 F.2d at 609–10 (citing H.J., Inc., 492 U.S. at 242).

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Finding no relatedness between the three separate transactions, we cannot measure
continuity by collectively considering the numerous alleged acts of deceit associated with
all three bids, which spanned eight years. Thus the Amended Complaint lacks predicate
acts occurring over a “substantial period of time” necessary for a proper allegation of
closed-ended continuity.
Additionally, nothing in the Amended Complaint suggests that Boro’s alleged
fraudulent transactions are its regular way of doing business. There is no allegation that
Boro submitted other bids in which they falsely promised to comply with prevailing wage
law in order to get that business. As the District Court properly noted, “[i]f, for example,
over these eight years, Defendants had 100 different contracts, the fact that they may have
committed fraud as to three of them (Ridley School District, Nashaminy School District,
and the Department of Navy) would be plainly insufficient to support a scheme under
RICO.” See Kehr Packages, 926 F.2d at 1418 (with “no indication that [defendants]
made other false statements or treated other customers in a similar manner,” the
complaint did not indicate that fraud was a regular way of doing business).
Thus, the Amended Complaint did not allege fraud that was related or continuous
so as to plead sufficiently the “pattern of racketeering activity” element of a RICO claim.
C. Injury
To have standing, a RICO plaintiff must also show that the alleged RICO
violations proximately caused injury to the plaintiff’s business property. 18 U.S.C.

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4 Bonavitacola does not explain why only the Ridley School District bid formed the
basis for its damages allegations.
12
§ 1964(c); Holmes v. Sec. Investor Protection Corp., 503 U.S. 258, 268 (1992). An
indirect injury remotely caused by the RICO violation will not satisfy proximate cause
requirement.
Bonavitacola’s alleged injury is that, as a result of Boro’s false promise to comply
with the prevailing wage law, Bonavitacola was denied the opportunity to compete with
Boro “on a fair and honest basis,” and consequently lost income and profits that it would
have earned if it had been awarded the Ridley School District4 contract.
The Amended Complaint does not allege how Boro’s promise to comply with
prevailing wage law influenced Ridley School District’s decision to award its contract to
Boro and not Bonavitacola. For example, the Amended Complaint does not indicate the
extent to which Boro’s bid was lower than Bonavitacola’s bid or whether Boro’s bid had
lower labor costs than Bonavitacola’s bid. Nor does it allege that Boro’s bid incorporated
any misclassified wages, or that the amount by which Boro underbid Bonavitacola was
attributable to misclassified wages. In contrast, the Second Circuit’s decision in
Commercial Cleaning Services, LLC v. Colin Service Systems, Inc. (which Bonavitacola
cites in support of its direct-injury argument) illustrates proper allegations of competitor-
injury in a RICO complaint: “The complaint asserts that Pratt & Whitney chose Colin
because Colin submitted ‘significantly lower’ bids in a ‘highly competitive’ price-

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sensitive market. According to the complaint, Colin was able to underbid its competitors
because its scheme to hire illegal immigrant workers permitted it to pay well below the
prevailing wage for legal workers.” 271 F.3d 374, 382 (2d Cir. 2001). A similar
description does not apply to Bonavitacola’s complaint.
Furthermore, judging by the facts in the Amended Complaint, Boro’s promise to
comply with prevailing wage law did not become a false promise until sometime after
Boro had been awarded the bid, when it began to submit (allegedly) false certified payroll
reports. As Bonavitacola had already lost the bid, it is not at all obvious what its injury
could have been. Nor is any explanation provided in the Amended Complaint.
The labor unions’ alleged injury is even more remote than Bonavitacola’s. The
unions state that they would have received additional contributions to their multi-
employer benefit plans for employees if Bonavitacola had been awarded the contract.
The District Court correctly noted that the Amended Complaint “does not state the
requisite allegations to show how the contract revenues following to Plaintiff
Bonavitacola, assuming it had been awarded any contract, would have resulted in benefit
to the plaintiff labor unions.” Bonavitacola II, at *12. Nor does the Amended Complaint
allege that the labor unions have standing to sue for “these types of damages which,
presumably are for the benefit of the union members.” Id.
For these reasons, we conclude that neither Bonavitacola nor the labor unions have
alleged the direct injury required for standing under RICO.

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V.
Conclusion
We conclude that Bonavitacola did not allege predicate acts of fraud with the
requisite particularity, did not allege a “pattern of racketeering activity” and did not allege
direct injury required for standing under RICO. Thus we affirm the judgment of the
District Court.

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TO THE CLERK:
Please file the foregoing Opinion.
By the Court,
/s/ Thomas L. Ambro
Circuit Judge

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