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NY Federal Court Swats RICO Action Filed by Tennis Club

July 28, 2009

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In <i>Gross v. Waywell,</i> a New York federal court recently dismissed a RICO action filed by the owners of a tennis club against its former employees. The decision is notable because in rendering its order, the court cited a number of very interesting facts regarding civil RICO actions.
The RICO statute was originally intended to be used as a law enforcement tool to supplement the government's efforts to protect the public from criminal conduct by encouraging and enlisting the civil litigation services of “private attorneys general." But as the Court noted, it instead has been abused by many plaintiffs' attorneys in their efforts to trigger the treble damage provision or to force venue into federal court.
The Court pointed out that:
-- 70% of RICO cases were disposed of on motions to dismiss or summary judgment;
-- 80% of those cases were decided in defendants' favor;
-- Plaintiffs prevailed in only 10% of judgments after trial, but only 25% of those judgments were affirmed on appeal
-- In other words, plaintiffs failed in 98% of civil RICO cases.
Not surprisingly, the <i>Gross</i> Court found that a RICO suit was not the proper forum for a dispute between tennis club owners and employees, and dismissed the Complaint.


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