Velez, Carlos v. Gamboa, Ronny , 457 F.3d 703 ( 2006 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-1690
RONNY GAMBOA,
Plaintiff-Appellee,
v.
CARLOS VELEZ, Chicago Police Officer #20162,
R. RODRIGUEZ, Chicago Police Officer #20230,
PAUL LOPEZ, Chicago Police Officer #2001, et al.,
Defendants-Appellants.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 03 C 219—Paul E. Plunkett, Judge.
____________
ARGUED MAY 12, 2006—DECIDED AUGUST 10, 2006
____________
Before MANION, KANNE, and ROVNER, Circuit Judges.
MANION, Circuit Judge. After a jury acquitted Ronny
Gamboa of murder, Gamboa sued several Chicago police
detectives under the Racketeer Influenced and Corrupt
Organizations Act (“RICO”), 18 U.S.C. §§ 1961 et seq. He
claimed that the detectives lied and otherwise conspired
in their investigation and testimony to falsely accuse him
and others of committing the murder. The detectives moved
to dismiss, arguing that Gamboa had failed to state a RICO
2 No. 05-1690
claim. The district court denied the motion but allowed the
detectives to pursue an interlocutory appeal. The officers
then petitioned this court for permission to appeal, and we
granted their petition. We now reverse.
I.
In July 1997, Sindulfo Miranda was murdered in Chicago.
The Chicago police department assigned detectives Alfonso
Bautista, Paul Lopez, R. Rodriguez, and Carlos Velez to the
case. As a result of the detectives’ investigation, Ronny
Gamboa was charged in November 1997 with murder and
solicitation of murder for hire. Their investigation turned up
evidence that Miranda was allegedly in a tavern owned by
Gamboa on the night of his murder. Other evidence sug-
gested that Gamboa allegedly solicited and participated in
Miranda’s kidnapping, beating, and murder. (Gamboa’s
supposed motive for killing Miranda is not readily apparent
from the record before us.) In the face of these and similar
allegations, Gamboa went to trial and was acquitted in
August 2000.
Other defendants initially implicated in Miranda’s murder
were not so fortunate. The detectives’ investigation linked
Omar Aguirre, Robert Gayol, Luis Ortiz, and Duarte Santos
to Gamboa and Miranda’s murder. Aguirre was convicted
of murder and sentenced to 55 years in prison. Gayol was
convicted of murder and sentenced to life. Ortiz pleaded
guilty to murder and received a 25-year sentence, and
Santos pleaded guilty to a lesser charge, receiving a 12-year
sentence. However, as the detectives now readily acknowl-
edge, each of these convictions (even the guilty pleas) has
been overturned. Apparently, Miranda’s true killers have
since been identified. See United States v. Carman, No. 02-CR-
No. 05-1690 3
464, 2004 WL 1638231, at *2 (N.D. Ill. July 16, 2004) (describ-
ing Miranda’s brutal murder as part of a gang’s attempt to
steal some 1,000 kilograms of marijuana from Miranda).
All this and more prompted Gamboa to sue the City of
Chicago and the four detectives responsible for his appar-
ently erroneous prosecution. Filed in January 2003, his
complaint led with a RICO claim under 18 U.S.C. § 1962(c).
It also included counts under 42 U.S.C. § 1983, as well as
state law claims of malicious prosecution and intentional
infliction of emotional distress. On the City and detectives’
motion, the district court dismissed the § 1983 and state law
claims with prejudice on statute-of-limitations grounds. In
addition, the district court dismissed the RICO count for
failing to state a claim but did so without prejudice for
Gamboa to file an amended complaint. Gamboa did file an
amended complaint, with the § 1962(c) claim as the only
count, and the City and detectives again moved to dismiss.
While that motion was pending Gamboa agreed to dismiss
the City from the case without prejudice.1
As to the detectives, the district court denied their second
motion to dismiss, concluding that Gamboa’s amended
complaint sufficiently stated a RICO claim. The legal
dispute here centered upon whether Gamboa adequately
alleged a pattern of racketeering activity, an element of his
RICO claim described in greater detail below. With respect
to that issue, the detectives, at the district court’s suggestion,
filed a motion requesting permission to pursue an interlocu-
1
Gamboa also named two private individuals as defendants,
Luis Ortiz and Miguel LaSalle, each of whom implicated Gamboa
in Miranda’s murder. However, the district court dismissed Ortiz
and LaSalle from the case without prejudice due to Gamboa’s
failure to serve them. See Fed. R. Civ. P. 4(m).
4 No. 05-1690
tory appeal under 28 U.S.C. § 1292(b). See Fed. R. App. P.
5(a)(3). The district court granted their request. The detec-
tives then petitioned this court for permission to appeal,
presenting the following question for review: “whether a
single scheme that ends without indication that it will be
repeated establishes a pattern of racketeering activity
merely because the scheme occurs over several years,
involves a variety of predicate acts, and targets more than
one victim.” We granted the detectives’ petition.
II.
Before tackling the interlocutory question presented by
the detectives, we first review several fundamental points
about stating a RICO claim under § 1962(c) and then further
examine the pleading at issue in this appeal, i.e., Gamboa’s
amended complaint. The theory of Gamboa’s claim is that
the four detectives coordinated a scheme of widespread
criminal misconduct to erroneously prosecute Gamboa,
Aguirre, Gayol, Ortiz, and Santos for Miranda’s murder and
then cover it up. (To be clear, Gamboa is the only plaintiff in
this action.) To advance his claim under § 1962(c), Gamboa
characterizes the alleged misconduct as racketeering
activity.
RICO, nonetheless, does not cover all instances of wrong-
doing. Rather, it is a unique cause of action that is con-
cerned with eradicating organized, long-term, habitual
criminal activity. See Pizzo v. Bekin Van Lines Co., 258 F.3d
629, 633 (7th Cir. 2001) (emphasizing the habitual nature
of the requisite criminal activity) (quoting H.J. Inc. v. Nw.
Bell Tel. Co., 492 U.S. 229, 242 (1989)); Midw. Grinding Co.,
Inc. v. Spitz, 976 F.2d 1016, 1019 (7th Cir. 1992). In keeping
with this limited purpose, there are four elements to a
No. 05-1690 5
§ 1962(c) claim: (1) conduct (2) of an enterprise (3) through
a pattern (4) of racketeering activity. See Sedima v. Imrex Co.,
473 U.S. 479, 496 (1985); Bressner v. Ambroziak, 379 F.3d 478,
481-82 (7th Cir. 2004). To give the detectives fair notice
of the claim against them and avoid dismissal under Fed. R.
Civ. P. 12(b)(6), Gamboa “must . . . allege each of these
elements to state a claim.” Sedima, 473 U.S. at 496.
The only element disputed in this appeal is the third
element—the pattern element. For this element to be
satisfied, the alleged acts of wrongdoing must not only be
related, but, important for purposes of this appeal, must
“amount to or pose a threat of continued criminal activity.”
Corley v. Rosewood Care Ctr., Inc. of Peoria, 388 F.3d 990, 1002
(7th Cir. 2004) (quoting H.J. Inc., 492 U.S. at 239); see also
Roger Whitmore’s Auto. Servs., Inc. v. Lake County, 424 F.3d
659, 672-74 (7th Cir. 2005) (citing H.J. Inc., 492 U.S. at 237-
42). This is true whether the misconduct at issue is consid-
ered a “close-ended” scheme (a completed scheme that,
by its duration, can carry an implicit threat of future
harm) or “open-ended” scheme (a scheme that, by its
intrinsic (e.g., business-as-usual) nature, threatens repetition
and thus future harm). See Roger Whitmore’s, 424 F.3d at 672-
73; Midw. Grinding, 976 F.2d at 1022-23. Consequently,
isolated instances of criminal behavior, not presenting at
least some threat of future harm, cannot meet § 1962(c)’s
continuity element. See Roger Whitmore’s, 424 F.3d at 673-74;
Pizzo, 258 F.3d at 633 (observing that “continuity” is a proxy
in the language of the case law for frequent, habitual
criminal conduct); Midw. Grinding, 976 F.2d at 1022-23.
In this case, the detectives maintain that Gamboa has
not satisfied the continuity element because the allega-
tions in his amended complaint—even when construed in
his favor for Rule 12(b)(6) purposes—present only a
6 No. 05-1690
single, nonrecurring scheme (a frame-up of five individ-
uals for a single murder), which, as alleged, does not
carry any threat of continued criminal activity. Since the
factual allegations in Gamboa’s amended complaint are
crucial to the question before us, we review those allega-
tions in detail. For purposes of this discussion, we accept the
amended complaint’s allegations as true and draw all
reasonable inferences therefrom in Gamboa’s favor. See
Bressner, 379 F.3d at 480.
The amended complaint begins by generally accusing
the detectives of making false arrests, tampering with
witness statements, procuring perjured testimony, commit-
ting perjury, and engaging in a malicious prosecution “in
order to intimidate and retaliate against” one person,
Gamboa. It further alleges that the detectives falsified police
reports, coerced witnesses to testify against Gamboa and
others falsely, and lied before a grand jury or in court “in an
attempt to convict GAMBOA and others of the crime of
murder and to keep him incarcerated, to cover up the false
arrests of GAMBOA and others.” The amended complaint
defines the word “others” to mean Aguirre, Gayol, Ortiz,
and Santos.
The amended complaint then moves to specifics, stat-
ing that Miranda was murdered in July 1997 and that
Gamboa was arrested for and charged with Miranda’s
murder in November 1997. It also names the four detectives
assigned to the Miranda murder investigation, Bautista,
Lopez, Rodriguez, and Velez. The amended complaint then
alleges that Rodriguez and Velez intimidated an individual
named Miguel LaSalle into falsely stating that Miranda’s
kidnapping and beating took place in Gamboa’s tavern at
the direction and control of Gamboa. Elsewhere, the
amended complaint alleges that LaSalle stated that Gamboa
No. 05-1690 7
solicited and participated in Miranda’s murder and that the
detectives used these statements knowing that they were
false. Also, according to the amended complaint, the
detectives coerced two individuals named Jose Chapa and
Leticia Martinez into “giv[ing] false statements or . . .
refus[ing] to testify to the truth” during the course of the
investigation/prosecution. With respect to Chapa in
particular, Rodriguez and Velez allegedly coerced him into
falsely stating that he was with Miranda in Gamboa’s tavern
on the night of the murder. Additionally, Rodriguez and
Velez allegedly intimidated Ortiz into falsely implicating
Gamboa in Miranda’s murder and further intimidated or
offered inducements to Ortiz to testify falsely at Gamboa’s
trial. Ortiz’s allegedly false testimony included statements
that he was present in the tavern when the solicitation for
murder occurred and while Miranda was kidnapped and
beaten. More important, Ortiz also allegedly falsely
stated that Gamboa solicited and participated in
Miranda’s murder. Similar statements were allegedly
extracted from Aguirre and Santos.
Furthermore, Gamboa avers that the detectives prepared
multiple reports based upon this allegedly false information
in an attempt, according to the amended complaint, to cover
up their false arrests of Gamboa and the others. Relatedly,
the detectives allegedly ignored information that would
have helped exonerate Gamboa. The amended complaint
then claims that the purportedly false reports and state-
ments led directly to Gamboa’s prosecution and all the
consequences that Gamboa suffered therefrom. Moreover,
knowing that the charges against Gamboa were false, the
detectives conspired, according to the amended complaint,
for more than five years to cover up their intimidation of
witnesses and other wrongdoing.
8 No. 05-1690
The amended complaint then turns to explaining the
nature of the detectives’ “racketeering activity,” maintaining
that they “illegally” worked to obstruct justice, to intimidate
witnesses into committing perjury, to cover up their false
arrests, and “to prosecute [Gamboa] for murder.” It alleges
that the detectives committed criminal offenses that in-
cluded influencing a grand jury, obstructing a criminal
investigation, obstructing state or local law enforcement,
extorting witnesses to commit perjury to avoid prosecution
or to induce false statements and testimony, obstructing
justice generally, and tampering with a witness all purport-
edly in violation of 18 U.S.C. §§ 1503, 1510, 1511, and 1512.
Arriving at the heart of the matter, the amended complaint
then averred the following:
Between July 1997 and December 2002, [the detectives]
did the following acts as part of their continued crim-
inal activity:
a) knowingly prepared a false confession in November
1997, which implicated GAMBOA in the solicitation of
murder for hire of Miranda and had Duarte Santos
execute same;
b) knowingly prepared a false confession in November
1997, which implicated GAMBOA in the solicitation of
murder for hire of Miranda and had Omar Aguirre
execute same;
c) knowingly prepared a false confession in November
1997, which implicated GAMBOA in the solicitation of
murder for hire of Miranda and had Luis Ortiz execute
same;
d) tendered the three false confessions to the Office of
the Cook County States [sic] Attorney, which were used
No. 05-1690 9
to in part prosecute Santos, Aguirre, Ortiz, Robert
Gayol, and [Gamboa] on murder charges;
e) prepared police reports between July and November
1997 and signed same, which contained knowingly false
oral and written statements of Santos, Aguirre and
Ortiz;
f) several weeks prior to [Gamboa’s] trial in August,
2000 on murder charges, coerced Luis Ortiz to change
his oral and written statements in order to create a
witness who allegedly heard GAMBOA solicit the
murder of Miranda and who witnessed GAMBOA
participate in the beating and murder of Miranda. Ortiz
was the only witness presented by the State at
GAMBOA’s murder trial who allegedly heard the
solicitation for murder;
g) coerced Luis Ortiz to falsely testify against GAMBOA
in an attempt to convict him on the charge of murder;
h) in the years 2001 and 2002, coerced Luis Ortiz to
falsely testify that he saw Gayol burn Miranda alive in a
car in order to obtain a murder conviction and life jail
sentence for Gayol;
i) coerced the Office of the Cook County States [sic]
Attorney to use the false statement of Omar Aguirre
in two separate murder trials in 1988 [sic] and 1999
in order to convict him of the murder of Miranda and to
sentence him to 55 years in jail;
j) on information and belief in the year 2002 provided
their police reports containing the false statements
and false confessions aforementioned to federal
agents[;] thereafter failed and refused to advise the
federal agents that the reports and statements contained
false information[;]
10 No. 05-1690
k) on information and belief have further refused to
cooperate with federal prosecutors in subsequent
prosecutions of the individuals who actually murdered
Miranda in order to continue to cover up the prepara-
tion of false reports, preparation of false statements,
perjury and intimidation.
Finally, the amended complaint concluded by recounting
the injuries inflicted by the detectives’ acts upon Gamboa,
Aguirre, Gayol, Ortiz, and Santos and by requesting treble
damages for Gamboa alone in excess of $10 million plus fees
and costs.
The amended complaint reveals that the detectives’
scheme, as alleged, had a limited purpose, distinct from
the detectives’ routine law enforcement duties. In places, the
amended complaint alleges that the detectives sought to
inflict a malicious murder prosecution upon Gamboa alone.
Elsewhere, it alleges that the purpose of the detectives’
criminal conduct was to frame Gamboa plus Aguirre, Gayol,
Ortiz, and Santos for Miranda’s murder. Even with the
addition of the other alleged victims, the amended com-
plaint cabins the detectives’ alleged wrongdoing here to a
one-time endeavor to wreak havoc upon all matters linked
to a single murder investigation. Consequently, the criminal
activity, as alleged, had a built-in end point: once the frame-
up was put to rest, the scheme was over.2 Cf. Roger
2
As the district court properly noted, acts to conceal the
underlying wrongdoing in a RICO suit do not carry with them
the threat of future harm and generally do not extend the
duration of the underlying scheme. See Midw. Grinding, 976 F.2d
at 1024 (citing Aldridge v. Lily-Tulip, Inc., 953 F.2d 587, 593-94
(11th Cir. 1992); Pyramid Sec., Ltd. v. IB Resolution, Inc., 924 F.2d
(continued...)
No. 05-1690 11
Whitmore’s, 424 F.3d at 674 (“[Plaintiff] pleaded himself out
of showing a continuing threat of continued activity,
because the alleged scheme had a natural ending point . . .
.”) (discussing open-ended continuity in summary judgment
context); Olive Can Co. v. Martin, 906 F.2d 1147, 1151 (7th
Cir. 1990) (defendants entitled to summary judgment in part
because “the undisputed evidence” showed that “the
scheme . . . had a natural ending with no threat of continued
criminal activity”). Furthermore, on top of the confining
nature of the amended complaint’s allegations is the
complete absence of any basis to suggest misconduct
beyond the bounds of this one murder investigation or to
otherwise indicate that the detectives have repeated or will
repeat their alleged unlawful behavior.3 Cf. Roger
Whitmore’s, 424 F.3d at 674 (discussing, in the summary
judgment context, the lack of any indication that defendants
had engaged in any other misconduct before or after the
closed-period scheme at issue). As the district court stated,
when granting the detectives’ § 1292(b) motion, the
“[amended] complaint does not permit the suggestion that
Defendants intended to or threatened to commit similar acts
in future investigations.”
Despite this inherent lack of a threat of future/habitual
criminal activity, the district court concluded that the
(...continued)
1114, 1117 (D.C. Cir. 1991)).
3
At oral argument, Gamboa’s attorney acknowledged that the
amended complaint is silent in this regard because he does not
have the necessary factual/evidentiary basis, under the strictures
of Fed. R. Civ. P. 11(b)(3), to make any such further allegations of
wrongdoing (e.g., that these detectives engaged in frame-ups as
a matter of course; that they have conducted other such malicious
investigations).
12 No. 05-1690
amended complaint sufficiently alleged continuity because
the detectives’ one-shot scheme took several years, involved
a variety of criminal acts, and targeted multiple victims.
While such factors are generally helpful in assessing
continuity, see Morgan v. Bank of Waukegan, 804 F.2d 970, 975
(7th Cir. 1986),4 we have cautioned that courts “are to apply
these factors with an eye toward achieving a ‘natural and
commonsense’ result, recognizing that ‘Congress was
concerned in RICO with long-term criminal conduct.’ ”
Vicom, Inc. v. Harbridge Merchant Servs. Inc., 20 F.3d 771, 780
(7th Cir. 1994) (quoting U.S. Textiles, Inc. v. Anheuser-Busch
Cos., 911 F.2d 1261, 1267 (7th Cir. 1990) (quoting H.J. Inc.,
492 U.S. at 237)); see also Roger Whitmore’s, 424 F.3d at 673-74.
The district court erred in allowing the factors to over-
ride the big picture. Since, as the district court correctly
recognized, the amended complaint’s allegations foreclosed
any threat of continued criminal activity, the natural and
commonsense result here is dismissal—the amended
complaint cannot support the continuity element.5 Restated,
4
In Morgan, we stated that “[r]elevant factors” in the continuity
analysis “include the number and variety of predicate acts
and the length of time over which they were committed, the
number of victims, the presence of separate schemes and the
occurrence of distinct injuries.” 804 F.2d at 975.
5
To its credit, the district court rightly recognized, upon fur-
ther reflection, that it had reached a counterintuitive result (find-
ing continuity when continuity was not alleged). In a status
conference after its Rule 12(b)(6) ruling, the district court ob-
served: “[T]he thought occurred to me . . . when I read about
what I had rendered in the Chicago Lawyer and how they dis-
cussed how it was[,] I don’t want to say groundbreaking, but
perhaps bizarre is the word. The question that occurred to me
(continued...)
No. 05-1690 13
when, as here, a complaint explicitly presents a distinct and
non-reoccurring scheme with a built-in termination point
and provides no indication that the perpetrators have
engaged or will engage in similar misconduct, the complaint
does not sufficiently allege continuity for § 1962(c) purposes
even if the purported scheme takes several years to unfold,
involves a variety of criminal acts, and targets more than
one victim. See Talbot v. Robert Matthews Distrib. Co., 961 F.2d
654, 662-63 (7th Cir. 1992) (failure to state a RICO claim even
though defendants’ alleged scheme “extended over a period
of years,” involved multiple fraudulent acts, and injured
more than one victim); see also W. Assocs. Ltd. P’ship. v. Mkt.
Square Assocs., 235 F.3d 629, 633-37 (D.C. Cir. 2001) (dis-
missal of complaint affirmed because alleged scheme, while
lasting some eight years, was merely a single effort and thus
failed to satisfy the pattern element); Efron v. Embassy Suites
(P.R.), Inc., 223 F.3d 12, 13, 17-21 (1st Cir. 2000) (failure to
state a RICO claim—failure to alleged the necessary
pattern—because “the acts as alleged comprise a single
effort, over a finite period of time”); Edmondson & Gallagher
v. Alban Towers Tenants Ass’n, 48 F.3d 1260, 1263, 1265 (D.C.
Cir. 1995) (dismissal of RICO claim upheld, concluding that,
even though the alleged scheme lasted some three years, it
was “virtually impossible for plaintiffs to state a RICO
claim” where they alleged a single-purpose scheme with a
discrete injury suffered by a small number of victims); cf.
Roger Whitmore’s, 424 F.3d at 673 (summary judgment
setting) (“Perhaps the most important element of RICO
continuity is its temporal aspect. Although we have not
(...continued)
is whether or not the City wants to make a motion to seek an
interim appeal of this under [§]1292(b). . . .” R.53-2.
14 No. 05-1690
employed a bright-line rule for how long a closed period
must be to satisfy continuity, we have not hesitated to find
that closed periods of several months to several years did not
qualify as ‘substantial’ enough to satisfy continuity.”
(emphasis added) (citing Midw. Grinding, 976 F.2d at 1024)).
We briefly add that this conclusion makes particular sense
in the context of a frame-up claim against police detectives.
An innate part of our legal system is that some criminal
defendants are acquitted, and some of those acquitted may
have causes of action under state tort law and/or federal
civil rights law. Here, Gamboa’s state and other federal
causes of action appear to be time- barred. However, that
does not mean, as Gamboa would have it, that we should
reformulate the law so as to indirectly revive other untimely
claims. RICO is not a substitute for every time-barred tort or
civil rights action. See Corley, 388 F.3d at 1002 (“In H.J., Inc.,
the Supreme Court ‘attempted to give definition to the
pattern requirement to forestall RICO’s use against isolated
or sporadic criminal activity, and to prevent RICO from
becoming a surrogate for garden variety fraud actions
properly brought under state law.’ ” (quoting Midw. Grind-
ing, 976 F.2d at 1022)). As we have previously observed:
[C]ivil RICO plaintiffs persist in trying to fit a square
peg in a round hole by squeezing garden-variety
business disputes into civil RICO actions. While it is
clear that the scope of civil RICO extends beyond the
prototypical mobster or organized crime syndicate,
it is equally evident that RICO has not federalized every
state common-law cause of action available to remedy
business deals gone sour.
Midw. Grinding, 976 F.2d at 1025 (citations omitted). While
we have previously addressed such misuse of RICO in the
business fraud context, see, e.g., id. at 1022, 1025, the reason-
No. 05-1690 15
ing applies with equal force here. RICO demands more than
a straightforward case of malicious prosecution (such as the
case before us) to open up its window to treble damages.
While we do not intend to minimize Gamboa’s case by
labeling it “garden variety,” it is not uncommon for a
criminal investigation to develop over the course of several
years. Further, many investigations involve a variety of
police activities and result in charges against multiple
defendants. Under the district court’s approach, the pres-
ence of three such commonplace occurrences would satisfy
§ 1962(c)’s continuity requirement and thereby routinely
enable the conversion of malicious prosecution claims into
RICO claims. That is too broad a brush given RICO’s limited
concern of punishing organized and habitual criminal
conduct. Cf. Evans v. City of Chicago, 434 F.3d 916, 928 n.23
(7th Cir. 2006) (generally observing that “[i]t is unlikely that
[Congress] would have had the foresight to see [RICO]
being utilized in an action against a municipality or its
police officers. . . .”).
III.
Gamboa’s amended complaint explicitly presents a
distinct and non-reoccurring scheme with a built-in termina-
tion point and does not otherwise provide an indication that
the detectives here have engaged or will engage in similar
misconduct. As a consequence, the wrongdoing alleged,
even when accepted as true, cannot amount to or pose a
threat of continued criminal activity. Thus, for the reasons
stated above, the amended complaint does not state a RICO
claim under § 1962(c). Accordingly, we REVERSE and
REMAND the case for further proceedings consistent with
this opinion.
16 No. 05-1690
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—8-10-06