12 August 2015

The Donald and Me

Is Donald Trump really a bully?  Well, I've got a "war story" about him too.  Here it is:

Some years back, a lawyer friend came to see me with a tale that still makes me shudder.  He was the managing partner of a small, successful New York City law firm when he got a call from his bank advising they were freezing his firm's account because the bank had just learned that he and his partners were being sued in federal court for $105,000,000!  The claim was the firm had violated the federal statute that made it a crime to "participate in the conduct of an enterprise's affairs through a pattern of racketeering activity." Yup, the law partners were accused in a civil suit of being racketeers as defined by a federal statute enacted to reign in the mob: RICO, which stands for Racketeering Influenced Corrupt Organizations.

That brings new punch to "Honey, today I had a bad day at the office."

I immediately sprang into action. Our first step was brilliant: we procured a copy of the Complaint. (Hey, ya pay big bucks, ya get innovative ideas.)

What was this about?  My clients often defended the rights of tenants. In this case, they had been retained by the tenants of an apartment house on Central Park South when the tenants learned that a real estate company (Donald Trump was its principal so I will hereinafter refer to it as"Trump") was about to buy the building and perhaps demolish it. Indeed, Trump did buy the building and did apply to demolish it, whereupon my clients instituted a series of state court proceedings and complaints to administrative agencies in an effort to secure the tenants' rights to remain in their rented apartments. None of this was unprecedented lawyering. It was, then and now, a reasonably common pattern. Indeed, the complaint specifically alleged that the defendant lawyers had used similar "tactics" as their "modus operandi" in other proceedings on behalf of other tenant groups against other landlords.

But none of those other landlords accused the tenants' lawyers of violating the RICO statute by means of their zealous lawyering on behalf of their clients.

I will spare you a detailed list of the complaint's allegations. The gist of it was Trump's claim that the defendant-inspired court and administrative proceedings amounted to a RICO violation that entitled Trump to recover 105 million bucks and an injunction against the law firm.

The foundational allegation of the pleading shows just how far Trump was willing to go to whip his adversary by crippling the adversary's lawyers:  Forgive the repetition please, but pay attention because this is important: one of the elements absolutely necessary to impose liability under RICO is that the criminal prosecutor (or civil plaintiff) show that the defendants "participated in the conduct of [an] enterprise's affairs through a pattern of racketeering activity."

So, to impose liability, a plaintiff must specify a corrupt enterprise.  What was the key illegal "enterprise" here? It was, Trump alleged, the New York Courts and administrative agencies to which the tenants' lawyers directed their complaints!  Importantly, there was no allegation or even suggestion that anyone in the court system had been corrupted, or had done anything other than to receive and act upon the pleadings and petitions filed by my clients.

Federal judge Whitman Knapp summed it up neatly when he wrote that this case "presents the question of whether a defendant can violate RICO by participating as a mere litigant in a court system or before an administrative body."

We moved to dismiss the complaint. I always try to inject a bit of humor in court appearances, though it is often grim.  When it was my turn to argue,  I opened with, "Your Honor, I argue today with some trepidation, lest I later find that in urging my clients' cause before this tribunal I am guilty of participating in a RICO enterprise." I don't recall the judge chuckling, but he didn't hold me in contempt either.

Bottom line: The District Court's opinion included a detailed examination of each allegation in the lengthy complaint and found no RICO violation. None. Nada. He threw the case out, with prejudice. (That means it cannot be repleaded, amended, whatever. It is done, cooked.)

No surprises: Of course Trump appealed. Hey, it's only legal fees for him--more pressure on the little guy.  After briefing and argument, the Second Circuit Court Court of Appeals promptly issued a unanimous one word opinion: "Affirmed." Sweet.

The end?  Not quite. Now my turn at bat.  Yogi got it right,  and it wasn't over because I was not finished. I had moved, under a federal court rule, to sanction Trump for prosecuting a frivolous lawsuit.  Bottom line, I don't know how much Mr. Trump paid his lawyers for this lawsuit, but he ended up paying my clients' legal bills too.

Hmm...is there a lesson here that informs the current national political discussion? Would President Trump play hardball with the Iranians, Chinese, etc?  WWTDD? (Bumper-sticker-speak for "What Would The Donald Do?)  What if, like I and my clients, those nations did not buckle before the bully and not only held their ground but fought back?

A bientot.

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