H.J. Inc. v. Northwestern Bell Telephone Co.
Citation: 492 U.S. 229 (1989)
Facts
H.J. Inc. and other plaintiffs alleged that Northwestern Bell bribed members of the Minnesota Public Utilities Commission over several years to obtain favorable rate decisions. They sued under RICO, alleging a “pattern of racketeering activity.” The Eighth Circuit dismissed, holding that the predicate acts must be part of separate “schemes” to constitute a RICO pattern.
Issue
What constitutes a “pattern of racketeering activity” under RICO, specifically what does the continuity requirement mean?
Holding
The Supreme Court rejected the Eighth Circuit’s “multiple schemes” test. A RICO pattern requires a relationship among the predicate acts plus continuity. Continuity can be shown either through closed-ended continuity (a series of related acts over a substantial period) or open-ended continuity (a threat of future criminal activity even over a shorter period).
Rule
RICO’s “pattern of racketeering activity” requires: (1) relatedness — the predicate acts must be related to each other (same participants, victims, methods, or purposes); and (2) continuity — either a closed-ended series of related predicates extending over a substantial period, or an open-ended pattern implying a threat of continuing activity.
Significance
H.J. Inc. remains the Supreme Court’s definitive statement on what constitutes a RICO pattern. The open-ended vs. closed-ended continuity framework is essential for civil and criminal RICO litigation. The case also confirms that RICO is not limited to “organized crime” in the traditional sense.