Cedric Kushner Promotions, Ltd. v. King

Cedric Kushner Promotions, Ltd., a corporate promoter of boxing matches, sued Don King, the president and sole shareholder of a rival corporation, alleging that King had conducted his corporation's affairs in violation of RICO.[1] RICO makes it "unlawful for any person employed by or associated with any enterprise... to conduct or participate... in the conduct of such enterprise's affairs through a pattern of racketeering activity."[1] The District Court dismissed the complaint. In affirming the decision, the Second Circuit Court of Appeals held that RICO applies only where a plaintiff shows the existence of two separate entities, a "person" and a distinct "enterprise," the affairs of which that "person" improperly conducts.[2] The court concluded that King was part of the corporation, not a "person," distinct from the "enterprise," who allegedly improperly conducted the "enterprise's affairs."[3]

Justice Stephen Breyer wrote the decision of the Court, which unanimously reversed the appellate court.[4] The Court held that "the need for two distinct entities is satisfied; hence, the RICO provision... applies when a corporate employee unlawfully conducts the affairs of the corporation of which he is the sole owner -- whether he conducts those affairs within the scope, or beyond the scope, of corporate authority."[5] "The corporate owner/employee, a natural person, is distinct from the corporation itself, a legally different entity,"[5] Justice Breyer wrote. "A corporate employee who conducts the corporation's affairs through an unlawful RICO 'pattern... of activity,' uses that corporation as a 'vehicle' whether he is, or is not, its sole owner."[5] Under this reading of the statute, the Court of appeals' decision was reached in error; the case was sent back to them for future disposition of the case.[4]

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• Text of Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158 (2001) is available from: CourtListener  Justia  Library of Congress  Oyez (oral argument audio)