May It Please The Court

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May It Please The Court
by Leonard Rivkin
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Quote of the Day - There is a lot of momentum toward limiting civil RICO at the court. - Tom Goldstein
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RICO Gets A Transfusion: Unum Life Insurance And Microsoft Left Bleeding

Not in the too distant past, attempts to use RICO, the Racketeer Influenced and Corrupt Organizations Act, in civil cases were shut down by the Courts as an abuse of the intent of the legislature.  The Courts regularly cited the statutory scheme enacted by Congress as restricted to prosecutors and limited the power of the Act to efforts to go after mobsters and criminal organizations when creative lawyers tried vainly to strike at corporate monoliths.

Not so anymore.

First, about a week ago, the Ninth Circuit allowed a RICO case to proceed against Microsoft for selling a Trial CD for its website portal, MSN, but allegedly continuing to charge the recipient's credit card without telling him.  Then at the end of this week, the Third Circuit allowed another RICO case to proceed against Unum Life Insurance Company for allegedly cutting off its disability benefits early.

Perhaps the pendulum is starting to swing back toward allowing RICO to be used in civil actions.

These two RICO cases may portend bigger problems for American corporations  The standard of proof is lower, the range of admissible evidence is wider, but worst of all for corporations, they allow the plaintiffs to recover attorneys fees and apply to the courts to multiply the attorneys fees award if the case is complicated and the plaintiffs are successful and brought a large benefit to many people.

While Microsoft may claim that the Ninth Circuit's ruling is a just a procedural technicality in the case against them, that's far from what their lawyers are likely telling the company.  One thing is for sure, however:  the settlement value of both cases just skyrocketed. 

Posted by J. Craig Williams on Saturday, May 19, 2007 at 08:58 Comments (0)


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